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Student Loans - the bane of my existence. ADVICE NEEDED.


Student Loans - the bane of my existence. ADVICE NEEDED.

Good afternoon, everyone. I started the journey to repair and rebuild my credit last week, and while I have been aggressive with addressing all the baddies, I spent the week pretending my student loan problems don't exist. In fact, they are probably my greatest issue. It is so bad that when I think about it, I want to either cry or die (depending on the day). I hate the fact that I can't go back and undo all the damage I've caused, and I hate that I have no choice but to repay all this money. 


But anyway, here is my question. Would it be to my detriment, benefit, or make no difference if I consolidate all my loans? I have 12 lines totaling $112k. Five of them are not in good standing - either delinquent or in collections. I am currently a student, so 5 of them are current and deferred until I'm finished. Two are showing as "closed/transferred" or sold. I think that may have been from a previous consolidation. I'm not sure. 


Since I know this debt will never go away, I suppose I should finally start acting like a grown up and start making regular payments. It just hurts to pay on something that I know I will never finish paying. But anyway, should I consolidate these? If I do, will that have a negative effect on my credit report in any way? Will it make any difference at all? 

Starting Score: 529 EQ | 551 TU | 614 EX | 579 TU FAKO as of 1/12/14
Current Score: 621 EQ | ??? TU | 614 EX | 618 TU FAKO as of 6/23/14
Short Term Goal Score: 650 across the board by 12/31/14

Long Term Goal Score: 720+ across the board by 6/30/15

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Message 1 of 5
Regular Contributor

Re: Student Loans - the bane of my existence. ADVICE NEEDED.

Consolidating puts all of your current tradelines in one place, and locks in the combined weighted average interest rate of them all.  Consolidation doesn't make negative payment history go away, so it won't help your credit in that way.  It pays off all of the tradelines you're consolidating, thereby closing them, and combines them into one big new loan/tradeline.  


If any of your current loans are in default (is that what you mean by "in collections"?) the only way to repair your credit is to rehabilitate them.  If you do rehabiliation, the default status goes away, and sometiems (rarely) you can get the collection agency/loan holder to also delete late payment history prior to default.  No matter what, getting rid of the default status usually improves your credit score...but not always.  If you choose to consolidate any of them while they are in default, the default status stays until 7 years after your date of first delinquency for each tradeline.


No matter what, the first step is figuring out the current status of each and every tradeline you have, and knowing exactly who the collection agencies are, if any.  If you don't know why some of your tradelines are showing transferred/sold status, then that's something else you really need to figure out.  Once you do, you'll be able to ask more specific questions and get better answers.  


I'm talking only about public loans here, not private. If have no clue about private loans.  


Congrats on taking the first step toward trying to get your student loan debt under control!  



TU FICO: 778 ||| EQ FICO: 784 ||| EX FICO '08 : 780
Message 2 of 5

Re: Student Loans - the bane of my existence. ADVICE NEEDED.

If these are federal student loans then checkout the Income based repayment plan.

Message 3 of 5
Regular Contributor

Re: Student Loans - the bane of my existence. ADVICE NEEDED.

You have to either get out of default or consolidate from default before you can qualify for IBR or ICR.  

TU FICO: 778 ||| EQ FICO: 784 ||| EX FICO '08 : 780
Message 4 of 5
New Member

Re: Student Loans - the bane of my existence. ADVICE NEEDED.

I recently left the DOE contract.  Rehabilitation payments used to be based on a percentage of the balance.  This was 0.76-1.29%.  You can now do payments based upon your income, so effectively like doing the IBR.  We were using this website to figure out the payments.  The biggest factors in calculating the payments are income and family size.  The collection agency I was at really didn't need any supporting documents while in default.  You may get asked for a 1040 from the previous year.  You can lie and tell them you didn't file or if there is any change in income this justifies the lower payment.  You won't need to provide paystubs.  The payment was called the reasonable and affordable rehabilitation program.  Keep in mind though once your out of default the new lender will need supporting documentation to get lower payments.  Hope this helps you out.

Message 5 of 5