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Student Loans that defaulted-- how to clean them up.

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Anonymous
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Student Loans that defaulted-- how to clean them up.

So I have been helping my sister.  This is one of the last things we need to tackle.  She had multiple student loans from back in 2006 till I think 2012.  They were in and out of deferrement.  Eventually sold off and navient picked them up and she's been good for the last year or so.  My question is:  is there anything to be done about all the entries are from Direct Loan Services that orginally had the loan.  There are almost 20 entries that are all bad and are not set to fall off until 2020.  She wanted to buy a house in two years and I don't think with these there she would be able to.  We've gotten almost all of her collections finished and with the excpetion of two, her collections report will be clear within the next year.  So this was our next hurdle.  Thanks!

Message 1 of 4
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SCF
Valued Contributor

Re: Student Loans that defaulted-- how to clean them up.

If the loans are in good standing now and being serviced by Navient, they are not in default.  Are these all federal loans?  How did she get them out of default?  There's basically three possibilities here: 1) the loans did not default, but were severely late and are now current 2) she consolidated the loans to get them our of default 3) she rehab'd the loans to get them out of default.

Message 2 of 4
Anonymous
Not applicable

Re: Student Loans that defaulted-- how to clean them up.

They are being serviced by navient.  She was put on a payment plan where if she made made nine months of payment they would be put in good standing and handed over to navient.  The loans were orginally with fed service loans and direct loan svc system. Those are when they defaulted.  They are all federal stanford loans.  suggestions?

Message 3 of 4
SCF
Valued Contributor

Re: Student Loans that defaulted-- how to clean them up.

Ok, it sounds like she went with option 3 and rehab'd her loans.  Any remarks relating to the default should be removed from the old accounts within a few months of completing the rehab.  That means that the previous lenders have to update the status of the loan to "paid" or "transferred" or something similar and remove any remarks like "defaulted", "assigned to gov't" or "insurance claim."  They are not required to remove the actual late marks that led up the default, but some lenders will do that if you ask.

 

The best place to start is contacting the servicer doing the reporting and letting them know you have completed your rehab and want your information updated accordingly.

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