Settling Defaulted Student Loans
If you have actually not made your federal Stafford, PLUS or Graduate PLUS loan payment in over 270 days, your trainee loan will be considered in default. What can you do about this to keep your credit from being messed up?
Having a defaulted Stafford, PLUS or Graduate PLUS loan on your credit report will cost you a lot in the long run. The bad mark will imply greater rates of interest and credit rejections until it is cleared, a minimum of 7 years. Even if you pay the loan completely it will still be marked as defaulted. There is just one way out of this predicament – loan rehabilitation.
Contact your loan provider and make plans to repay your student loan and you are on your way to a tidy credit report. Your lender wants to get paid, and they know the best way for that to occur is to deal with you to come up with a payment you can manage. When you reach a satisfying repayment arrangement with your lender adhere to it!
After 9 full payments on your defaulted Stafford, PLUS or Graduate PLUS loan made within twenty days of their due dates (twelve complete payments for Perkins loans) your loan will be gotten of default status and your credit record will be tidy. These need to be voluntary payments. Garnishment or other forced payments do not count. As quickly as your default status is cleared you will be complimentary to consolidate your loans and lower your payments even more.
While you might have the ability to consolidate after 3 successive payments your loan will not be taken out of default status. This will be marked on your credit record as “defaulted, paid in full” and still considered a black mark so loan rehabilitation prior to combination is necessary for a clean credit report