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Perkins loan in default after 5 years no payment

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I didn't make a payment on a Perkins loan from 2004.  I knew about the loan shortly after leaving school and ignored it.  After moving numerous times in the last 7 years, I forgot about it.  I recently applied to go back to school and discovered that it is now in default with a CA and I cannot obtain more financial aid until it is consolidated, rehabbed or paid off.  Original balance was $500, now something like $1,100.

 

The loan was from the term 9/04, adding in 6 month grace period and 270 days of no payment, plus 7 years (on credit report), I have calculated it to come off my credit report this last month 12/12.  Problem is, the first date of delinquency is listed as 2/09 on CR.  I will be requesting DV later this week with CA, because so far my attempts to find out the total balance from OC and CA have been fruitless.  I want to go back to school ASAP so I'm wondering what would be my quickest way to settle this.  I was thinking of disputing the first date of delinquency with the CRA's.  Since rehabbing the loan would require 10 payments over 9 months, I would rather not wait this long.

 

1. Since it is a student loan, will the listing for the OC and CA come off my CR after 7 years if I successfully dispute with the CRA's?

 

2. After getting these items deleted from my CR, if I make a payment in full, will the negative listings go back on my report for 7 more years?  If it would, is there anything else I could do that I'm not thinking of?  I'm not against suing if it would help.

 

 

 

 

 

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1. Since it is a student loan, will the listing for the OC and CA come off my CR after 7 years if I successfully dispute with the CRA's?

 

Federally backed student loans are VERY different from regular defaulted debt.  You will NOT get any more aid until this is paid off or out of default.  Even if it does not appear on your credit report when you fill out the FAFSA for financial aid it will be compared to the database of existing loans and the defaulted Perkins loan will be discovered.  Your aid will be denied until it is cleared up as they said.

 

The FCRA does not address how long Federally backed student loans can report and generally as long as they are in default the government keeps them on your report knowing that if you want credit especially a home you will have to pay up to clean it up.  This is why despite the "drop off" date you calculated they are still on your report a year later than that.  If you scroll through student loan debt forums you will see threads from former students whose loans are 10+ years old and defaulted and still on their credit report.  

 

2. After getting these items deleted from my CR, if I make a payment in full, will the negative listings go back on my report for 7 more years?  If it would, is there anything else I could do that I'm not thinking of?  I'm not against suing if it would help.

 

This will remain on your CR for 7 years after you pay it off.  Suing the government will not help.  The problem is you borrowed federally backed money and did not pay it back.  The government is the one entity with a very LONG memory on debts you owe them and no forgiveness.  They do stick by their word about removing the negative entries after 9-10 months of payments in rehab.  

 

Only you can decide what is "fastest" or best for your situation.  However, due to the large number of students borrowing money for school and defaulting credit is now an issue when re-issuing aid to students who have defaulted in the past.  I am enrolled in school now and using federal loans and they are getting stricter with each semester I complete.  

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