The Confessions of a
Student Loan Collector
The main concern to the borrower is how much they will have to pay every month. The Department of Education and/or the collection agency may tell a borrower that they are obligated to pay an amount beyond what they can afford such as a down payment. Be advised, a borrower is not required to make a payment which is higher than the minimum qualifying amount. The law says that a person should only have to pay what is considered “reasonable and affordable” for the lender and the borrower. (Get the Exclusive Interview “Confessions of a student loan collector”)
-Mr. Kay
The Rogue student loan collector
Rehabilitation Payment program
What exactly is the Rehabilitation payment program?
The rehabilitation payment program is an installment arrangement (payment plan). The Department of Education and the collection agency will first evaluate your financial status, and if they determine that you’re financially incapability of paying a lump sum amount they will allow payments to take place. Only after your loan service company and Department of Ed receives the necessary documents you will be allowed to resolve your student loan debt through this process. On this rehabilitation payment program you will be required to complete a number of consistent payments in order to successfully discharge out of collections.
What is the main purpose of the Rehabilitation payment program?
This program is a solution for those who can’t pay the entire balance of the loan or the settle. The rehabilitation payment program will allow you to get your loan back into “Good Standings” with the Dept of Education. By completing the program they will bring your loan back to its original state allowing you to regain the same options you had prior to defaulting on this student loan. Before they offer this payment plan option you will need to provide them with a list of obligations (bills) and proof of your monthly income. Upon receipt of this information, if you successfully prove your financial hardship, they will offer you a payment amount based off of the overall balance of your student loan. This program is considered a “Formal arrangement”. On this arrangement they will require that you make 9-10 timely payments.
Once you successfully rehabilitate the defaulted Federal student loan by making on-time payment, your loan(s) will be brought back to “current status” and this will reflect your credit status. With this program they are providing you an opportunity to remove the negative rating on your credit report that relates to your student loan. In other words, they are willing to report this student loan as if your payments were never late.
Benefits may include:
- Your loan will be taken out of default status (collections).
- The default status reported by them to the national credit bureaus will be removed.
- You’ll be eligible for any remaining deferment, forbearance and additional financial aid (Title IV).
- The Federal wage garnishment and Treasury offset will end.
Other ways to receive additional federal financial aid:
- Repay or satisfy the loan in full.
- Consolidate your loan(s) through the FFEL loan consolidation program or the William D. Ford Direct Loan Program.
- Rehabilitate your loan by completing the rehabilitation payment program.
Since defaulted student loans have no statute of limitations for enforceability, you will remain ineligible for additional financial aid until you complete one of the options mentioned above.
Are you facing Wage garnishment?
You may qualify for the rehabilitation payment program and reap the same benefits by making voluntary payments on top of the garnishment payments. You have the ability to put a stop to the wage garnishment by completing this program. Your payments must meet the requirements mentioned in this section. If a garnishment is in place it is important that you negotiate an affordable payment amount, a way to achieve this is by understanding their calculation process.
