@Dennis885 wrote:Trying to help someone with 9 defaulted loans (8 FFELP Unsubsidized and 1 FFELP Subsized). They have all been in default for years prior to Covid. Goal is to get the defaults removed from her credit report and then consolidate and pay via SAVE, as her payment will likely be $0.
Just want to make sure I'm understanding the correct order to get this done. Does this seem right?
- Request Fresh Start from her current servicer / guarantor (AES/PHEAA). Once approved all 9 loans will be out of default and back to "in repayment / current" status.
- Once this occurs, go ahead and consolidate with a direct loan? Now the old loans will be "paid off" and the new (consolidated) loan will be eligible for SAVE and be a new account on her credit report.
My only question is what payment options are available after initiating Fresh Start and before consolidating?
Also, she could consolidate the defaulted loans first then do fresh start, but that would leave all the negative entries on her credit report from AES, correct? Or does direct loan consolidation remove prior associated accounts that were consolidated?
Thank you in advance for the help!!!
I would do the fresh start first. I'm not sure if they'd be eligible for it after consolidation since that would technically be a "new" loan and the old lates would still be showing (as you stated earlier). She needs to get those lates removed, and the loans brought current, and this would be the only way. It's very hard to get student loan rates removed from your credit report.
I can't comment beyond that, as I didn't look into the SAVE program myself. From reading here, most of the fresh start repayments seem to be very minimal.
