So your SCHOOL LOANS are in DEFAULT and you are too scared to do anything about it
When you call your loan servicer, they  wonât treat you like shit anymore. They wonât threaten you or harass you or insist you pay half your paycheck to get out of default. Here is what Iâve experienced while dealing with defaulted government loans.Â
1. Â Find out who owns all your debts right now. It may be early enough that your most recent loan servicer could still be the owner. If itâs been over a few months, or years, it will be a collections agency or several agencies. Check your snail mail. Their policies usually dictate that they send paper mail. Once you find the collections agency, ask for âproof of debt.â By law, they must provide you proof that they own your debts so they canât scam you.
2. Once you establish that this agency owns your debt, tell them that you canât afford much but would like to ârehabilitate your loans.â This means you will make a payment for 9 consecutive months. The agency, by law, must use a government formula to figure out how much you pay each month. If you make around 40K, you will be asked to pay somewhere around $100-150/month. If you are unemployed, you can rehab for as little as $5 a month. Ask them to autodebit so you donât accidentally miss a payment. If you miss one, your 9 months starts over.Â
3. Once you finish your 9 months, call the collections agency to make sure they wonât autodebit anymore. They will hand your debt back over to the loan servicer you worked with before they got the loan. Most likely, you have Great Lakes, Nelnet, Navient (formerly known as Sallie Mae), or one of these loan servicers. Then go to this studentloans.gov website and make an FSA ID and PW.Â
4. Begin a consolidation through the student loans website. The consolidation form will ask you to write in every loan. It might be on the website already, but check this NSLDS.gov site to be sure. This website has an up-to-date account of all your outstanding loans. Consolidating is a tedious and boring process. Make sure you have a few hours free to do this.Â
5. When you consolidate, the form requires you to fill out a payment plan. You want an IBR plan, or Income Based Repayment Plan. This plan will allow you to make minimal payments according to your income for 20-25 years. Then, the government will forgive your loan. Consider it 25-year mortgage for your college education. Also, the IBR will re-evaluate your income every year in order to adjust the monthly payment. If you lose your job, your monthly payment will reduce dramatically, and if you find a better paying job, you may have to pay a bit more.Â
6. Also while consolidating, you must choose which loan servicers youâd like to work with. I work with Nelnet. Nelnet was difficult to work with for years, like not allowing you to email in documentsâonly mail or fax. You can email scanned documents to them now. Remember, you can download free scanning apps to use with your smartphone camera. Remember to keep a log of every time you call, whom you talked to, and what you talked about. This is an important lesson I learned while calling companies for my immigrant parents. Anyway, because of government regulation, they are actually nice to you and available 24/7.They canât pull their bullshit anymore because they use government calculations. Iâm sure itâs the same with all the other loan servicers. As I said before, I work with Nelnet, but it really doesnât matter which one you choose.Â
7. When you finish with consolidation, wait a few days and call your loan servicer. Ask them if theyâve received the request for consolidation. Then, check in with them every week for the next six weeks to hear the status of the consolidation. They are not good about emailing you updates, i.e. never. I did my consolidation wrong the first time, and they just rejected it and never notified me. I found out when I made my weekly Monday night call. Had to fill out the damn form all over again. Itâs finally been accepted.Â
8. They will then set up you up with an IBR plan. Your payments will most likely be the same as what you payed the collection agency because theyâre using the same government calculator. Autodebit those payments.Â
This is all I know so far. This is far better than defaulting and having the government garnish your wages. And once you begin the IBR plan, there is an end in sight!
I donât know much about these, but I know private is much harder to deal with.Â
1. Itâs not great to default with these loans either. Defaulting and declaring bankruptcy does NOT absolve you from the loan. Your wages can still be garnished if the collections agency sues you and wins.Â
2. If you make regular payments, the loan servicer will not settle your debt with you. Because theyâd rather have your interest payments. If you default in order to settle with the collections agency who buys your debt, youâd better have enough cash to pay them off in one lump sum. They will bargain with you to get you to pay between 50-60% of your loan. If you own 100K, do you have 60K in disposable income? If so, you shouldnât ruin your credit! Â
3. You can now refinance your loans! Due to new legislation (I think itâs Elizabeth Warrenâs doing), you are allowed to consolidate all your private loans under one bank and get a lower, fixed interest rate. Iâm willing to bet your interest rates are at 8% or higher. You can consolidate all these to under 5%, or even as low as 2%âthe better your credit, the better your rate. I would consider perhaps working with the credit unions instead of a bank.
I hope this helps you. If you have any questions, please send me a message and Iâll do my best to help you figure it out.
baratheonpilled
discoholicmusic
yousharknotpass
turnnoffyourmind
snowghoul
andulkaphoto
