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Default student loan, Going back to school- want federal aid

Submitted by on Sat, 10/01/2005 - 13:07
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I have decided to join my school again and I am sure that my application will be approved. The problem lies with funds. My credit is not very good. I've lost my last job very recently. Moreover I owe some default student loans. When I contacted a student loan servicing company, they told me that I won't be able to get the federal aid any more. Anyone else here having similar problem? Can anybody suggest me someway so that I can enter my school by next academic session?


Default student loans put a stop in getting further federal grants. If you are in default on one student loan, you are not eligible to receive Title IV federal financial aid. The possible options are-

  • Pay the loan in full.

  • Negotiate with your loan holder. They might suggest you some ways so that you regain your eligibility of receiving federal grants. Sometimes 6 consecutive timely payments are required to get back the worthiness. The amount is settled so that you can afford it easily. But one late payment can divert you from the way, so ensure that you never fail to pay the settled amount.

  • Try a consolidation program. See the benefits of student debt consolidation-
    http://forums.debtcc.com/forums/consolidate-studentloan.html

Feel free to share your problems in the forums in future.

Bryan


Submitted by 4u.bryan on Sat, 10/01/2005 - 13:20

4u.bryan

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One of my friends recently went through this. She was able to negotiate with her loan holder. How long have you been defaulted for?

She had been in default for the last 6 years and it took her almost a year to get out of the default status. They will more than likely require you to make some payments toward this. Once you are out of the default status, you will be eligible to receive aid again. It is important however to get with your loan holder to let them know of your intentions and they can guide you.


Submitted by Rhonda28 on Sat, 10/01/2005 - 22:11

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[quote=Rhonda28]They will more than likely require you to make some payments toward this.[/quote]
I do agree with you Rhonda. Once the lender understands that the borrower is trying to repay the loan, it becomes easier to get more options and facilities during the repayment process.

The person who has tried, at least, to pay his loan back gets some extra privilege while applying for deferment, forbearance or loan cancellation even.

Both rehabilitation and consolidation make you paying portions of your loan, helping you to be in a better position.


Submitted by 4u.bryan on Mon, 10/03/2005 - 08:28

4u.bryan

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I have a few student loans which are default now. I did only two or three payments for these loans immediately after leaving school. Then I left the state and joined a job. More than 5 years are over, nobody contacted me, but suddenly I discovered that my credit report is showing these default loan accounts. I thought the SOL was expired. Anyways, what should I do now? Any idea?


Submitted by on Mon, 10/03/2005 - 15:36

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Quote:

I thought the SOL was expired.

Federal Student Loans do not have any statute of limitation; you are obliged to pay back the loan through out your life. Federal government can get back the loan amount through wage garnishment even without court order and they are rarely written off in bankruptcy. So it will be wiser to pay them off and get out of the debt.

Quote:
what should I do now? Any idea?

Since your loans are already default, you are not eligible for forbearance or deferment. Hence your options are limited now. You can-
  • Try to pay them in full
  • Consolidate your loans
  • Apply for rehabilitation
You need to pay 6 to 12 installments of agreed amount to your loan holder per month basis to rehabilitate your default loans. The payments should be made within due dates and no lump sum payment instead of multiple installments is allowed at all.

If you opt consolidation, your default loans will be restructured under one loan amount and with lower interest rate. So it will be easy for you to repay the loans very fast. Since it's already late, I think you should try consolidation program to start the repayment process right now.

For any more queries please feel free to ask in the forums.

Bryan


Submitted by 4u.bryan on Mon, 10/03/2005 - 15:58

4u.bryan

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this is a very good subject and i received information i was looking for i do have student loans out there but never paid on any of them yet and never completed the courses and now i do want to go back to finish and with this info i now know what i need to do to see if i still qualify for student loans if i haven't paid on them and haven't rec'd notice about them would i just reapply for another?


Submitted by debbra47 on Mon, 10/10/2005 - 02:30

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debbra47,

If you are already defaulted on your student loans, you won't be able to get further financial aid. Contact your previous loan holders and make your default accounts current so that you regain your eligibility.

I think rehabilitation or consolidation can help you a lot. See the forum discussion here to decide your way-
http://forums.debtcc.com/forums/avoid-defaults.html


Submitted by 4u.bryan on Fri, 10/14/2005 - 10:09

4u.bryan

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I have a federal student loan that is being garnished from my wages from DOE because of its default status. I am accepting of that, as I know it needed to be paid.

However, once the loan is paid off and the garnishments stop, will I be at all able to get federal student aid to go to grad school? If so, what might I be eligible for? (I looked on the website and didn't see any guidance on this.)


Submitted by on Sat, 10/31/2009 - 16:06

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Thank you for responding so promptly! That's good to hear, but I'm curious - the fact that I defaulted the first time to the point of garnishment won't factor in me getting new financial aid?

Also, does one's credit report play a factor in how eligibility is determined?

Thanks!


Submitted by on Sun, 11/01/2009 - 17:46

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I read on-line about some kind of consolidation program where you can set up your payments based on how much you make. This was (from memory) a federal program.

Also, i keep being told that if i can defer my payments for 25 years i would not have to pay them back, is there any validity to that?


Submitted by on Tue, 11/17/2009 - 02:31

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SOAPLADY......I've used the 'Income Contingent Plan' on my Student Loan. I've used all the deferements and forbearances I can use. However.....I've never heard of defering a loan for 25 years...that's a long time!! Here's my question......: if you pay on a loan for 25 years, and you STILL have an outstanding balance on your loan after that time, your loan can STILL be written-off?


Submitted by sdchargers_63 on Tue, 11/17/2009 - 06:14

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I have two major student loans, from two different schools, broken in to about 7 or 8 smaller loans, each loan for about 2500 or so. At the moment the older major loan is being garnished. I want to go back to school, and I want all my loans, about 50k in all to be consolidated, so that I can get out of default, out of garnishment and back on track, is there any way to do this? or am I just out of luck?


Submitted by on Mon, 12/14/2009 - 12:06

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You have 7 or 8 loans...each dispersment is a seperate loan and not part of anything else. Just wanted to clarify this.

You would need to rehab the loan that is being garnished. It will take 9 payments over and above the garnishment. You cannot consolidate a loan that is currently being garnished.


Submitted by SOAPLADY on Mon, 12/14/2009 - 12:21

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each term was a new loan. but since I went to two different schools, I think it is just two big loans. I just got a message from DMS, saying they can/will try to help me. and read that I can not get any government help what so ever, food stamps, unemployment etc. Do I need to continue deferring my second loan, while my first loan is being garnished? can I be garnished for both?


Submitted by on Mon, 12/14/2009 - 17:03

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I left school on a medical leave, withdraw passing in 2006 and have since defaulted on all student loans. I have 100 credit hours and want to finish my bachelors, pretty sure I'm only 22.5 hours away??? Any advice for me??? I'm not objecting to paying monthly payment to the university to finish either...


Submitted by on Sat, 01/16/2010 - 15:58

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I have had a stroke of bad luck of keeping a job after college. I had already deffered my student loans for a year, but in this ecnomy that didnt last .. I have paid 4 months and now am 3 months behind. I have entered college again and have received federal aid once again after some paperwork . Would i need to contact the lenders? whould they automatically know that I am back in school? will the 3 months of unpaid payments be forgotten till I am finished with college again?

thanks


Submitted by on Tue, 08/31/2010 - 20:20

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thanks i got them calling me today and informed them that I am attending classes again. The Lenders want me to fax them a verification of enrollment form and to make sure that the College has me registered back on the national student clearinghouse data base .. but this did not excuse the past due amounts for the months of June and July .. thanks for the quick responses and comments


Submitted by on Wed, 09/01/2010 - 10:42

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Great Topic! I saw this briefly touched on, but I'd like to hear something a little more solid. I just began the process of trying rehabilitate my defaulted student loan with the intention of going back to school next year. Now, once rehabilitated, you are "eligable" for new federal loans, but what are the chances you will get them? Also, can I apply for FAFSA or scholarships before the defaulted loan is considered rehabilitated (as I'd like to get started on my other financing options as soon as possible)?
Thanks!


Submitted by on Sun, 09/05/2010 - 23:30

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Soaplady, was that in response to my question? Yeah, I get that much - I just don't know how much "eligible" relates to actually getting the loan, or is it pretty much at that point as long as I need it, it will be there (ie, my financial conditions are worse off or equal to when I took out the original loans). And how is FAFSA related? Can I send in the FAFSA forms before my loans are out of default? Or will they just "well we can't offer you any other aid because..." I still have to talk to the financial aid office at the school (which I'll do after the holiday today) but it seems like they don't send you information on other grants and scholarships you might be eligable for until you send in the FAFSA form.


Submitted by on Mon, 09/06/2010 - 08:29

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You can complete the FAFSA online but until the 6 payments are made you are ineligible, meaning you will be denied. Even after the 6 payments, you might need a financial aid letter from the CA.

Eligible in federal terms means you get them, ineligible means you don't.

FAFSA = Free Application for Federal Student Aid.


Submitted by SOAPLADY on Mon, 09/06/2010 - 09:21

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I have defaulted 5 federal student loans twice. The first time, I made consecutive payments for a year and was able to rehabilitate my student loans. I defaulted once again. After a few years, I am a half time student again but as a result of being in default, I cannot apply for aid. Is loan consolidation my only option?

I've read that you can try to contact your lender, but that is that only recommended when you have private student loans?

I've done a little online research and found this: http://loanconsolidation.ed.gov

Is this the best option for federal student loan consolidation?

Once I consolidate, will I be able to re-apply and qualify for further federal aid?

How long after I consolidate the loans, can I re-apply for fed aid?


Submitted by on Thu, 09/06/2012 - 19:00

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Have you consolidated before??? If you have never consolidated before, it is the only way to go. Once your loans are out of default, you regain your financial aid eligibility.


If you have consolidated before, you cannot consolidate a defaulted consolidation.....just googled it and from what I read, you can only consolidate a defaulted consolidation loan if you have an additional loan to add to it.
From the Direct Loan website....
borrowers cannot consolidate defaulted loans under these conditions:


  • If a judgment has been issued against a defaulted loan, it cannot be included in the consolidation unless the judgment order has been vacated (dismissed).
  • If they are trying to consolidate defaulted Direct Consolidation Loans and do not include at least one additional eligible loan in the consolidation.



Rehab is not an option either...you can only rehab once.


Submitted by SOAPLADY on Thu, 09/06/2012 - 19:29

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