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What's the best way for me to pay what I owe?


kmc4
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Hello everyone,

I'm looking for some advice. Unfortunately a while back I had a siuation that made it very difficult to pay back my student loans for such a while and they defaulted. They're not such a ridiculous amount and I've been working to save enough to pay them off completely and I'm looking for the best way to do so.

I pulled a copy of my credit report for the first time and looking at my TransUnion report now and it lists:

DIRECT LOAN SVS SYSTEM

Pay Status: In Collection

Date Opened: 08/30/2005

Date Closed: 03/31/2010

Loan Type: Student Loan

But then it also lists two separate US Dept. of Education loans:

US DEPT OF EDUCATION

Pay Status: In Collection

Original Creditor: US Dept. of Education

Date Opened: 08/30/2005

Date Closed: 07/31/2010

The first one for a higher amount and the second for a lower.

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I guess my question is: What's the best way to deal with this? The amount is only for a little under $3,000 and I can pay it off now with one check. But I don't understand what 'Direct Loans' is exactly. Did the department of education transfer my debt to Direct Loans?

I'm wondering who I need to pay and how I can get this information off there.

I only had a year left, but I can't finish school yet because I can't get my transcripts released.

If anyone could provide me with some advice I would be greatly appreciative.

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Not to sound too obvious, but why don't you call the student loan people. You're dealing with the dept of education, not a junk debt buyer. You should easily get a straight answer.

Those debts can't be discharged (generally speaking) so they are going to have all your records.

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Well, the reason I am asking is because there are so many threads within each sub-category of these forums that have tidbits of information, that, without prior knowledge, could be detrimental to handling.

Paying a bit on an old debt could reactivate it for another seven years. Or if the creditor and the debtor come to an agreement to have information removed upon payment without getting that in writing.

Things of this nature.

They may seem like foolish questions to many of you, but I'm just trying to make sure I close things the best way available to me.

I'm really just trying to find out if I pay them out in full to direct loans... will all negative information be removed from my report (the Direct Loan entry and the two student loan entries)? If that is the case do I need to ask them for written proof or is it just done automatically?

Again, apologies for what may seem obvious.

Edited by kmc4
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Direct Loans is an affiliation of the USDOE. They are more than likely two separate loans that were not consolidated together. A quick way to check this would be to call the student loan tracking number 1-800-433-3243. This number will tell you every loan you have out in your name and who to contact for each one.

If it turns out that these are two seperate loans, it would be best to pay them off as soon as possible. The statute of limitations (where if you pay on an old debt it renews it) is not applicable to government loans, thus would not effect these loans. The amount that is reported to your credit agency may not be factoring in collection fees, though. These typically run anywhere from 18% to 23% of the principal, but when you call to get the exact amount ask if you can get a settlement offer and they may waive the fees for you.

And don't worry about asking questions. That is why this forum is here! Good luck!

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