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us dept of ed

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us dept of ed

Is there a length of time that the us dept of ed can attempt to collect a debt? The loan is from 2008/9/10 (i'd have to verify to be sure). I got a letter from Alltran education inc that wasn't very detailed about what is owed or anything for me to verify. Do they fall under the 7 year stipulation as well?

Message 1 of 11
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Established Contributor

Re: us dept of ed

Student Loans are a life sentence. Start paying... 🙄
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Message 2 of 11
Frequent Contributor

Re: us dept of ed

Short answer no. 

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation

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Message 3 of 11
Valued Contributor

Re: us dept of ed

If you have a federal loan, then there is generally no limit to the debt. So not only will the debt continue to accrue interest and fees with no end in sight, they do not need to sue you and get a judgement to enforce collection practices. This means they can garnishment your wages, take your tax refund or from a social security check with little advanced notice.
The good news is that once you decide to take responsibility for your loans there are quite a few options to get you out of default, establish affordable payments and one day get your loan forgiveness.
To start with you need to find out where your loan is. If Alltran is the collection agency they should be able to send you a statement when you call or write them. Or you could go on the National Student Loan Database (NSLDS) website and it should tell you the status of your loans and who they're with. They're likely in default.
Next you need to get it out of default to restore the federal loan benefits such as plans to forgiveness. To do this, you can rehabilitate them or consolidate them. It's a one-time second chance. Most choose rehabbing because although it takes longer, it removes the default from your credit report and sometimes the lates. The payments can be lowered if you submit information about your income and expenses to recalculate payments.
After rehab is finished, you'll likely get a score boost. You can now choose a new plan. I suggest an Income-driven repayment plan (IDR). Forgiveness in about 20 years (25 grad). The plans people select most are the Income-based repayment plan (IBR) and REPAY. Payments can be as low as $0.
Do you have any questions? Feel free to ask.:-)



Message 4 of 11
Established Contributor

Re: us dept of ed

An ex of mine had defaulted on a 15 year old Fed SL.  She had moved several times during that period however the Feds eventually caught up with her and took her income tax refund for about 3 years in a row.  She applied for a car loan and found a + 120 day late on her CB but had it successfully removed as it has been over 7 years from last payment made.  However, within a year her employer received a notice of wage garnishment.  She called the Treasury dept and arranged to make monthly payments.  This went on for several years until the balance and accured interest was paid.  Interest also accured while she was making payments.  Her saving grace was her loan amount wasn't that bad and the Feds never increased her interest rate which was extremely low.   

Message 5 of 11
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Valued Contributor

Re: us dept of ed

Jim44: Yep! They don't mess around with these federal loans once you're in default. They have options for collection that other lenders don't have. The sad thing is if they only put this same amount of energy to working with borrowers getting close to default, only a fraction of them would still fail to make payments.



Message 6 of 11
Valued Contributor

Re: us dept of ed

Many people don't understand FEDERAL Student Loans can even garnish your SOCIAL SECURITY when you retire. One of the few debts that can pierce into Social Security.

Start Paying...





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Message 7 of 11
Established Contributor

Re: us dept of ed


@Sabii wrote:
Jim44: Yep! They don't mess around with these federal loans once you're in default. They have options for collection that other lenders don't have. The sad thing is if they only put this same amount of energy to working with borrowers getting close to default, only a fraction of them would still fail to make payments.

@Sabii wrote:
Jim44: Yep! They don't mess around with these federal loans once you're in default. They have options for collection that other lenders don't have. The sad thing is if they only put this same amount of energy to working with borrowers getting close to default, only a fraction of them would still fail to make payments.

I have to say though, the feds were the ones that arranged her payments.  She itemized her monthly bills including other debts and they negotiated a payment that she could work with.  She was late a few times, they never charged a late fee... and they never reported this loan again to any CBs.  It never affected her credit after the +120 days late were removed.  ** I didn't know about their ability to garnish SS payments!  Crap!Smiley Indifferent

Message 8 of 11
Valued Contributor

Re: us dept of ed

How long ago was this?
At some point the Dept of Education made the decision to no longer service student loans themselves. Hence why everyone deals with the contractors, the loan servicer's. D of Ed couldn't be bothered. Similarly, I'm pretty sure when you default it will eventually get sent to a collection company or companies to collect. You said the Feds arranged something with her. If I'm not mistaken, today it would be the collection agency. If they had started the wage garnishment procedures, nothing can stop it short of rehabbing or consolidation. While you can ask for the garnished about to be reduced or eliminated by proving you don't have enough to live on, most people will have to pay something. I don't think you can arrange a payment plan at this point.
The collection agency will certainly report you late if you are and they charge fees, often an almost a ridiculous amount.
The best thing to do for just people is just rehab the loan, pick an income-driven repayment plan and never default again because if it defaults again, there isn't a way to get out of it.



Message 9 of 11
Community Leader
Senior Contributor

Re: us dept of ed

To my knowledge, the Dept of Ed has never directly serviced student loans. In fact, they moved away several years ago from using private lenders, the Dept of Ed is now the lender, but still uses a servicer.

Loan servicers do work with people nearing default through different features of sudemt loans, forbearance being the main one. The borrower needs to stay in contact, it's a two way street.
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