Student Loan Default, company won't work with me

Is this a federally backed or private loan?

If it is a federal loan, they cannot demand a down payment as a condition of rehab. However, you cannot make rehab a condition of your payments...at least the way you phased it.

If this is a private loan, you are SOL...rehabs do not exist for private student loans.

It was a federal loan, I assume, I got it through FAFSA. It was originally with AES but then it was bought out by some collection agency DCS. They want 5% down in order to keep them from garnishing my wages and put me in the rehab program. I said I am willing to set up payments regardless, but I cannot put anything down.

The loan was not bought out by some collection agency. You defaulted and your guarantor paid your claim. They have simply assigned your debt to a CA.


They cannot demand a down payment as a condition of rehab. There is nothing in the higher education Act (HEA) that requires this. Simply ask for "reasonable and affordable" payments....use that verbage. If they refuse, then you can tell them you will contact the student loan ombusdsman for asssistance since they are not following the HEA.

I'm surprised, when I defaulted on my federal loan a couple years ago, DCS was very helpful and fair. No advance payment, down payment, whatever, was required. They asked one simple question 'what can you afford a month', and they immediately agreed and I rehabbed successfully.

Good luck with DCS. I have a private student loan in collections with them. It was a citibank student loan for $6000. They want $3000 in 2 days. A lady called last month and told me that my loan was going into final review and that I had 2 days to pay the settlement amount of $3,000. I told her I couldn't come up with it and I would just have to see what the final review is. Then I don't hear from her for a month and she calls today and tells me that my loan is going up for final review in 2 days and that I need $3,000 and that "her client" wants to move forward with collection activity.

I almost had to laugh. She couldn't even remember that she already lied about final review last month, and now she is threatening the same again. I told her I'd be happy to work out a payment plan. But she said that if I do a payment plan that I will have to put $3,000 and then pay off the rest in $300 a month payments.

So I can either settle the account for $3,000 OR pay $3,000 as a down payment for a payment plan. If I had a spare $3,000 laying around I wouldn't be in this mess!

Private student loans and federal student loans are two completely different types of collections. With private loans, you have no options for rehab or consolidation....plus they do sue as a regular course of business. However with federal loans, they have to follow the federal rules. DCS works under contract with many FFELP guarantors and it is a US Department of Education vendor. These are multi million dollar contracts and particularly with the Dept of Ed, written complaints on collection activities can result in less accounts being placed or loss of the contract. The DOE requires that all of their vendors stay and operate in compliance of the rules.

Dcs done the same to me on rehab, but would not accept $200 a month. They have sent two garnishments to my employer after more than 20 threats. Also, they are going to garnish my taxes. Rom what I was told I should have sent the money for they could not garnish if I was trying to pay and if they refused payment they refused I had the debt and they could not garnish. They are mad because they will get $200 a month half interest half principle for I pay child support which w&s my original offer and they keep calling they are trying to help me., bs they want more money than they are getting. Dont ask for the last four of my social if you cant tell who you are with.

by the way I was paying till I went through custody battle and used my two forbearances. I support a child and pay child support not receiving it myself pay 600 a month on bills with rent, I have 200 a month left for groceries etc and dsc rep told me I shou"d think about moving to cheaper resident so u could afford to pay more than $200 a month on student loan for I did bot qualify for a hearing. Really should I be in a shelter or tell my kid she cant eat because someone told me to pay the $400 a month instead of $200. I understand I owe the debt but they do not work with you and I almost got fired when I told them four times do not call my job. they wont leave a message on my cell.