How deep a hole is this?
March 25, 2008 12:37 PM Subscribe
One of my boyfriend's student loans just got turned over to a collection agency. How bad is this?
He's a graduate student and has several student loans. He's always been prompt with payments, including slowly paying off the principal. He assumed that this loan would be automatically deferred since he's still a graduate student, just like his other student loans. He even called them a few months ago and then they told him that the deferment was taken care of. Now, without any warning, they've turned it over to a collection agency. He never received an email, a letter or a phone call before this happened. It seems really unfair to me that my boyfriend should be punished because the company misled him. He now has to fill out a form saying that he's still in school and send it to them. My question is: how bad is this going to look on his credit report? Is there any way for him to get this completely removed from it? Basically, what recourse does he have to fight this?
He's a graduate student and has several student loans. He's always been prompt with payments, including slowly paying off the principal. He assumed that this loan would be automatically deferred since he's still a graduate student, just like his other student loans. He even called them a few months ago and then they told him that the deferment was taken care of. Now, without any warning, they've turned it over to a collection agency. He never received an email, a letter or a phone call before this happened. It seems really unfair to me that my boyfriend should be punished because the company misled him. He now has to fill out a form saying that he's still in school and send it to them. My question is: how bad is this going to look on his credit report? Is there any way for him to get this completely removed from it? Basically, what recourse does he have to fight this?
He now has to fill out a form saying that he's still in school and send it to them.
What exactly has he heard from this collection agency? Have they notified him of default and pending action or did they just ask him to fill out a form? Sometimes loans, or even just the servicing rights to loans, are sold or transferred--in other words, you should make sure you clearly understand what's going on before freaking out.
posted by mullacc at 12:55 PM on March 25, 2008
What exactly has he heard from this collection agency? Have they notified him of default and pending action or did they just ask him to fill out a form? Sometimes loans, or even just the servicing rights to loans, are sold or transferred--in other words, you should make sure you clearly understand what's going on before freaking out.
posted by mullacc at 12:55 PM on March 25, 2008
Does your boyfriend have documentation that shows his loans were deferred? I have US student loans and the Dept of Education sends me a quarterly interest statement. On this statement, it shows that my loan is currently deferred because I'm a student.
If he doesn't, it's time to start making phone calls and tracking down where things went off the rails. If he has to do this, please stress that it's very important to document who he spoke with, when and about what for each phone call he makes regarding this issue. Hopefully this will be resolved quickly and easily, but in the likely occurrence it isn't, having a record of calls is much better than, "Well, I spoke to someone about this last week and they said it would be taken care of."
posted by Nelsormensch at 1:00 PM on March 25, 2008
If he doesn't, it's time to start making phone calls and tracking down where things went off the rails. If he has to do this, please stress that it's very important to document who he spoke with, when and about what for each phone call he makes regarding this issue. Hopefully this will be resolved quickly and easily, but in the likely occurrence it isn't, having a record of calls is much better than, "Well, I spoke to someone about this last week and they said it would be taken care of."
posted by Nelsormensch at 1:00 PM on March 25, 2008
Response by poster: I'm sorry -- we live in the US -- should have mentioned that.
posted by peacheater at 1:06 PM on March 25, 2008
posted by peacheater at 1:06 PM on March 25, 2008
Response by poster: @mullacc -- Yes, they've notified him of default. He says that he received a notification from the US Federal Loan Agency (?) that he was now in default and not eligible for any further student loans.
@Nelsormensch -- My boyfriend says that he has loans from the Dept of Education for which he gets the quarterly statements and notification that he has deferred status. He says that he didn't have to do any paperwork for this to happen. The loan for which we are having this problem is a Perkins Loan which he got from his undergrad institution.
posted by peacheater at 1:12 PM on March 25, 2008
@Nelsormensch -- My boyfriend says that he has loans from the Dept of Education for which he gets the quarterly statements and notification that he has deferred status. He says that he didn't have to do any paperwork for this to happen. The loan for which we are having this problem is a Perkins Loan which he got from his undergrad institution.
posted by peacheater at 1:12 PM on March 25, 2008
This happened to me (in Canada). I sent in all the paperwork and the student loans agency lost it. When I discovered it had been misprocessed, I called the agency. The reps with whom I spoke told me that the loans centre was a giant abyss and that they lost paperwork much of the time. However, a manager told me that I'd lost all the paperwork. I had a long-term fight with them, but I eventually got them to go away.
He should follow up and see what records of calls he has. He might be able to at least suggest he got confirmation. I did a request for all call records and logs. I also asked for copies of all paperwork I had ever submitted. I took copies of anything I sent in, too. When they started admitting they were shredding my requests for information, their case became very shaky.
posted by acoutu at 1:29 PM on March 25, 2008
He should follow up and see what records of calls he has. He might be able to at least suggest he got confirmation. I did a request for all call records and logs. I also asked for copies of all paperwork I had ever submitted. I took copies of anything I sent in, too. When they started admitting they were shredding my requests for information, their case became very shaky.
posted by acoutu at 1:29 PM on March 25, 2008
Last time I went back to school I had to send in a form from the current school saying I was registered, etc. I don't think you can just "say you're in school." It seems like if he can do that---to the Dept. of Ed---the collection agency won't have anything to collect on. I would call the Dept. of Ed and explain the situation and they should be able to call off the hounds.
posted by hulahulagirl at 1:32 PM on March 25, 2008
posted by hulahulagirl at 1:32 PM on March 25, 2008
Response by poster: Thanks for all the answers so far.
Just to clarify, the collection agency isn't actually trying to collect from him right now -- they just want him to send a form in with proof that he's in school and the loan will be deferred. I'm just worried about how this will look on his credit history.
posted by peacheater at 1:53 PM on March 25, 2008
Just to clarify, the collection agency isn't actually trying to collect from him right now -- they just want him to send a form in with proof that he's in school and the loan will be deferred. I'm just worried about how this will look on his credit history.
posted by peacheater at 1:53 PM on March 25, 2008
I had the same problem - a loan went into repayment and I didn't pay attention to the bills. when i finally got around to convincing them the loan should have been in deferment it was too late - they said I was at fault regardless and the delinquencies stayed on my credit report for seven years.
posted by chickaboo at 1:57 PM on March 25, 2008
posted by chickaboo at 1:57 PM on March 25, 2008
I should clarify the loan went into repayment while I was still a full time student - demonstrably their fault, and I still couldn't prevent the negative credit reporting.
posted by chickaboo at 1:58 PM on March 25, 2008
posted by chickaboo at 1:58 PM on March 25, 2008
Best answer: Just to clarify, the collection agency isn't actually trying to collect from him right now -- they just want him to send a form in with proof that he's in school and the loan will be deferred. I'm just worried about how this will look on his credit history.
Well, that's a bit less alarming. He (and you, and everyone else in the US) is entitled to one free credit report per year. He can wait a little bit and then request his credit report. Then he can see what impact, if any, this had on his credit score.
posted by Nelsormensch at 2:22 PM on March 25, 2008
Well, that's a bit less alarming. He (and you, and everyone else in the US) is entitled to one free credit report per year. He can wait a little bit and then request his credit report. Then he can see what impact, if any, this had on his credit score.
posted by Nelsormensch at 2:22 PM on March 25, 2008
If it did affect his score, he can have them make a note about the situation, too.
posted by acoutu at 3:03 PM on March 25, 2008
posted by acoutu at 3:03 PM on March 25, 2008
Best answer: Student loan agencies are a PITA. When I bought my house, one of my husband's loans was listed several times (as separate loans!) in default. At that point, a bit of letter-writing made everything work out credit-report-wise. The mortgage folk were surprisingly (?) helpful in that regard; it sounded like they run into that sort of thing quite often.
As far as your particulars, someone at his current school should be able to quickly and easily get him the right paperwork to mail off to all the parties concerned. Make sure it goes to the institution currently holding the loan, as well as the collection agency.
Oh, and a tip, since you mentioned it was a Perkins from his undergrad: if you are lucky, the school itself will be managing the loan. Get to know those folks. When we were untangling mr. epersonae's student loans, I got to be quite friendly with the Perkins lady :) at the school in question. Came in handy a couple of times.
posted by epersonae at 3:12 PM on March 25, 2008
As far as your particulars, someone at his current school should be able to quickly and easily get him the right paperwork to mail off to all the parties concerned. Make sure it goes to the institution currently holding the loan, as well as the collection agency.
Oh, and a tip, since you mentioned it was a Perkins from his undergrad: if you are lucky, the school itself will be managing the loan. Get to know those folks. When we were untangling mr. epersonae's student loans, I got to be quite friendly with the Perkins lady :) at the school in question. Came in handy a couple of times.
posted by epersonae at 3:12 PM on March 25, 2008
Don't worry too much about his credit history. You can ask the collection agency if this is going to be reported, and if it has been reported, you can ask them to un-report it if it was reported incorrectly or improperly.
Deferment doesn't even show up on a credit report; does it? I mean, when I deferred on my undergrad loans to go to law school, my credit report looked spic-and-span.
posted by jabberjaw at 5:40 PM on March 25, 2008
Deferment doesn't even show up on a credit report; does it? I mean, when I deferred on my undergrad loans to go to law school, my credit report looked spic-and-span.
posted by jabberjaw at 5:40 PM on March 25, 2008
Response by poster: Thanks for all the replies. I guess I probably overreacted a bit. My boyfriend says that he is definitely going to get a free credit report after a bit and talk to people to get things changed if there's anything bad there.
posted by peacheater at 10:10 AM on March 26, 2008
posted by peacheater at 10:10 AM on March 26, 2008
This thread is closed to new comments.
My general observation here in Canada (first-hand and second-hand) is that these things are usually due to a lack of diligence on the part of the loan holder (ie some manner of paperwork they neglected to do or a wrong assumption on their part) but again, hard to say without knowing even what country you're talking about.
posted by loiseau at 12:44 PM on March 25, 2008