Student Loan Repayment Affect On Credit Score

Anonymous · ‎08-11-2010

My student loans are currently deferred. I am wondering what the affect on my credit score will be once they go into repayment. I will be setting up an income based repayment plan and making all payments on time. But, I am also looking to purchase a house. Right now my credit score is right where I need it to be, so I am afraid that my credit score may drop once my loans enter repayment. Any feedback you have to offer would be greatly appreciated! Thank you.

Anonymous · ‎09-02-2010

I'd love to know this too...

laz98 · ‎09-02-2010

nothing exciting happens. you still owe the same amount. it hasn't affected my scores at all.

Anonymous · ‎09-04-2010

After a very lengthy illness (6+ years), most of which I was unable to work, my deferred and then defaulted student loans ($60,000) have fallen off of my credit report. I'd like to start making payments again, but I don't really want such a large amount of debt to suddenly re-appear and cause my score to drop dramatically. I offered to start making payments on the two earliest loans so that only those balances ($8,000 + $3,300) showed up on my report, then they could add the others gradually as my income increased or the first ones were paid off. Apparently that wasn't good enough, they'd rather get nothing.

I hope to be able to work full-time again within the next two years, and I was making over $100,000 yearly when I got ill, so a larger payment then wouldn't be a problem. Right now a few medical bills are the only bad debt on my credit report, and the collection agencies for those seem to be willing to negotiate reasonable settlements. I suppose I could look into IBR, but what shows on your credit report with that? Maybe I should just sit back and not worry about it until my income is back to normal.

Any ideas about what I should do?

laz98 · ‎09-04-2010

@Anonymous wrote:
After a very lengthy illness (6+ years), most of which I was unable to work, my deferred and then defaulted student loans ($60,000) have fallen off of my credit report. I'd like to start making payments again, but I don't really want such a large amount of debt to suddenly re-appear and cause my score to drop dramatically. I offered to start making payments on the two earliest loans so that only those balances ($8,000 + $3,300) showed up on my report, then they could add the others gradually as my income increased or the first ones were paid off. Apparently that wasn't good enough, they'd rather get nothing.

I hope to be able to work full-time again within the next two years, and I was making over $100,000 yearly when I got ill, so a larger payment then wouldn't be a problem. Right now a few medical bills are the only bad debt on my credit report, and the collection agencies for those seem to be willing to negotiate reasonable settlements. I suppose I could look into IBR, but what shows on your credit report with that? Maybe I should just sit back and not worry about it until my income is back to normal.

Any ideas about what I should do?

they shouldn't come back on your reports, if the CRTP is up. i don't know if you can do IBR with such old defaulted loans, or defaulted loans period.

p.s. you might want to start your own thread, to get more responses. people might not see your post here

hodap2001 · ‎09-05-2010

FYI - If you are requesting Income Based Repayment (IBR) it is based upon your yearly reported Income Taxes which will set-up your monthly payment plans. If you can afford a mortgage payment, you can afford your student loan standard monthly repayment. I strongly encourage you to re-think IBR because the scenario you gave is not the purpose for IBR - That is not what the Federal Government had in mind in creating this additional repayment program. It was set-up for the 10% of population who lives below the poverty level in the U.S. which you are not since you can clearly afford a mortgage. Please visit www.finaid.org for more information.

laz98 · ‎09-05-2010

@hodap2001 wrote:
FYI - If you are requesting Income Based Repayment (IBR) it is based upon your yearly reported Income Taxes which will set-up your monthly payment plans. If you can afford a mortgage payment, you can afford your student loan standard monthly repayment. I strongly encourage you to re-think IBR because the scenario you gave is not the purpose for IBR - That is not what the Federal Government had in mind in creating this additional repayment program. It was set-up for the 10% of population who lives below the poverty level in the U.S. which you are not since you can clearly afford a mortgage. Please visit www.finaid.org for more information.

very very good info! thank you hodap.

Anonymous · ‎09-05-2010

Thanks, laz98, I will start a new thread...

hodap2001 · ‎09-06-2010

Your welcome laz98 - you give excellent advice as well. I've been in the Financial Aid Industry for over 8 years now in various levels of Government so I try to contribute to the forum as much as I can to educate folks about Financial Aid.

laz98 · ‎09-06-2010

@hodap2001 wrote:
Your welcome laz98 - you give excellent advice as well. I've been in the Financial Aid Industry for over 8 years now in various levels of Government so I try to contribute to the forum as much as I can to educate folks about Financial Aid.

Well I for one am very thankful! Financial Aid can be so confusing at times, I'm glad you are willing to share your expertise!