Question: I defaulted on a stafford loan several years back and it was turned over to the Dept. of Justice. Since August of 2000, I’ve been making payments, and the current balance is just under $10,000. Since I was in default in ligitation, my financial aid counselors here at U. of Al told me that I was ineligible for any federal aid until the loan is paid back in full. Then, they told me to try private lenders, like Sallie Mae, are my last resort. I apply to Sallie Mae and their requirements for student with defaulted loan is that a person needs to make 12 consecutive payments on time and be current. When I called the lady to who handles my account at the U.S. attorney’s office in Birmingham,(a real dingbat)she said that I am current but haven’t been making payments on time. She, then, tells me that the postmark date was not the due date, after 3 friggin years. Now, earliest I’m eligible for student loans with Sallie Mae is next August or have my loan bought from the government to receive federal aid. If anyone can help me, I appreciate the info. very much.

Answer: If DOJ has the loan your loan was probably reduced to a judgement. My first question is – has the loan been reduced to a judgement?

There are certain conditions when you can qualify for additional T-IV (title 4) aid and loans if one or more of your T-IV loans are in default.

1. Consolidate your loan with the Federal Direct Loan Program with no-money down and go on an income contingent repayment plan 2. Make 3 consecutive payments and consolidate with a private lender or the Direct loan program 3. Make 6 consecutive On-time reasonable and affordable payments 4. Make 12 consecutive On-time reasonable and affordable payments and rehabilitate your loan.

Also, ED has said that judgement debtors can make payments above and beyond the judgement payment plan amount to be considered voluntary… But you really cannot do this because your judgement connotes that every penny is due and payable in full immediately. It is a catch 22…

I do understand that some guaranty agencies as well as the Department of Education have vacated judgements – when applicable – and allowed the debtor to consolidate or rehabilitate their loan. But I have not heard of this happening at DOJ.

Sallie Mae gave you their rehabilitation criteria – not consolidation criteria.

I think that you need to convince DOJ that it is in the government’s (the people’s) best interest to vacate the judgement… A tough argument – but it has been made successfully in other federal agencies. Also, have the US Attorney explain “timely” and see if it stands in the statutory and regulatory definition – plus or minus 15 days of the established due date… Maybe this can help you and she can recalculate the timeliness of your payments. If you think she is wrong… get proof in the form of all the canceled checks of the last few years…

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