Student Loan Collection Ideas

Posted on: August 30, 2008 by Matt

As stated in a post earlier in the week, I met with a credit counselor on Wednesday evening. I did not use a consumer credit counseling service but rather an individual that provides financial consulting catered to my needs. I plan to write more about the entire conversation but wanted to post some ideas he provided for dealing with the student loans in collection.

I asked about settling the loan which may be less expensive but would put me in a tougher position in the future for getting a mortgage to get my own home. The suggestions that he put forward are:

Contact VSAC: Living in Vermont and having been a student in Vermont has some advantages. I am not sure what other states may offer for a similar solution though.
Contact the original lender: Either call the college that the loan was through and work out a rehabilitation directly with them or just send them a check and see what happens. If the checks are cashed, stop dealing with the collection agency. Call the college again.
Contact the State Attorney General’s Office: They can inform me of my rights and provide some guidance. Apparently there is a slim possibility that they will want to handle the case directly if it is a collection agency they have had problems with in the past. He noted that it is not likely but possible.
Write a letter to the collection agency: Demand my interest rates and payment schedules. Set forward my exact monthly payment and arrange that any additional payment is for principal only.

I plan on starting all these items in the next week and will be sure to keep updating my site here with what I find!

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