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If defaulted student loan of about $80K all of a sudden is gone from CR?


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I am asking for someone who is a disabled vet and  with their rating, they have been sent paperwork by the US Dept of Ed (who owns the loan) to have the VA fill out to have their loan forgiven.

 

Provided the paperwork is processed and it is in fact forgiven, the person handling their case told them that the account and any record of it will be wiped from the credit bureaus as if it never happen.

 

If that is the case (he is aware that it may not be, but is just interested in the answer to 'if it is'), how will that affect his credit score?

 

He said the last he checked his score was about 520 (Fico) and that this loan has been in default for about 3 years.

 

Thanks for any thoughts, advice, guesses, etc, in advance!

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  • 1 month later...

Thank you both for responding.
I'm not sure what else is on his credit report Clydesmom, but I did mention your reply to them and they said they don't know.  I advised him to pull his 3 free reports now so that he can compare after the SLs are taken care of.  

 

Willingtocope, I am sure you're right.  I owe almost $63k and when I used the calculator to see what would happen if I paid off all of my student loan debt, it showed a possible increase of 20.  For that much outstanding debt, I thought that wasn't very much of a change.

 

On a newer note, after this man told me about what he's doing, I checked into it and I also qualify for the discharge.  The only thing different is that they told me it will not be 'wiped clean' from my credit report, but rather show as a zero balance until it falls off.  Also, I will be responsible for paying taxes on the discharged amount, but hey, that is better than this monkey on my back for the rest of my life!

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