RESOLVING A DEFAULTED LOAN

General Dispute Information
If you would like EDFUND, or its agencies, to review your account, please send us a detailed description of your dispute along with supporting documentation. Below is some information that may help you understand our review process and documentation needed for specific disputes.

Collection Agency Disputes
If you wish to dispute the collection practices of a specific collection agency, you can contact their qualified manager or you can contact the following agency:


Federal Trade Commission
Division of Financial Practices
600 Pennsylvania Avenue, N.W.,
Washington, D.C. 20580

Can I negotiate a lower payoff amount?
No, EDFUND does not compromise or write-off loan balances. If you are experiencing financial difficulty, you may be able to negotiate a lower monthly payment amount or a temporary suspension of your payments. You are entitled to a repayment schedule that is reasonable and affordable. To obtain a lower monthly repayment schedule, you must submit documentation of your financial circumstances so that EDFUND or its agencies can verify your inability to pay the loan at the amount that has been determined by EDFUND.

How is my credit rating affected by a defaulted student loan?
EDFUND reports your defaulted loan as a "collection account." If you pay your defaulted loan in full, the comment on your credit report changes to "paid collection account."

If you believe that EDFUND's credit reporting is inaccurate, you may file a consumer dispute with the credit bureau.

The Fair Credit Reporting Act allows for credit bureaus to remove information after it becomes obsolete or outdated. If the initial negative report is more than seven years old, EDFUND will delete the negative credit remark. Information on your outstanding guaranteed student loan debt will not appear on your credit report. You still have a legal obligation to pay the outstanding loan balance and collection efforts will continue until the loan is paid in full.

Can I get a deferment on a defaulted loan?
No, your loans are not eligible for deferment after default. Deferments, which allow postponement of loan payments, are only available prior to default.

I was underage when I signed for this loan. Do I have any options?
While it is true that, under state law, a minor may not be held liable for contracted obligations, this does not apply to contracted obligations made under the Federal Higher Education Act of 1965. According to the federal law, which supersedes state law, you are responsible for the repayment of your student loan(s).

I have made payments that were not applied to my defaulted loan. What can I do?
If EDFUND or your lender/servicer has not applied or misapplied a payment to your student loan debt, you may request a review by sending front and back copies of the canceled checks or money orders in question to EDFUND. Please do not send copies of check registers or money order stubs; these are not proof that your payments were received and cashed. Also, do not send copies of all your payment records; EDFUND will review only those items that you have identified as missing or misapplied. In the case of money orders, you must initiate a trace of the document with the issuing bank or company and provide EDFUND with this documentation. It is important that you continue to make your regular payments to EDFUND while your dispute is ongoing.

Can I acquire financial aid records from a school that is closed?

You may contact:

Federal Student Aid Information Center
ATTN: Financial Aid Transcript Request
P.O. Box 4129
Iowa City, IA 52244
(800) 433-3243

You must include the following information with your request:

  • Your full name
  • Full name of school
  • City and state of school
  • Return address
  • Signature of student
  • Any other information that you feel would be helpful in locating your financial aid records

Questions or comments? Check our Contact list for additional assistance.

Can I get my lender to buy back (repurchase) my loan?
A repurchase occurs when your lender, that originally filed to have your loan put into default, buys your loan back from EDFUND. This puts your loan back into good standing. By having your loan repurchased, all negative credit reporting comments regarding this loan will be removed from your credit report. You will also be eligible to apply for additional financial aid, as well as temporary suspension of payments i.e. deferment/forbearance.

If you request a review of your loan records and require the lender to repurchase your defaulted loans, you must submit documentation:

  • that the lender made an error in the handling of your loans.
  • proof that payments were made during the delinquency period prior to default.
  • documentation that you applied for and received an approved deferment prior to default.
  • other evidence of an error by the lender.

While your request for repurchase is being reviewed by your lender, you need to begin repayment because collection activities will continue during the review process. Your loans may be assigned to a collection agency and may be reported as a collection account to nationwide credit bureaus. You lose the right to deferment and to repayment of your loan in monthly installments. Your state and federal tax refunds may be offset, and litigation is also a possibility.

Who can I contact to dispute the quality of my school's education?
EDFUND does not have jurisdiction over the academic programs of educational institutions. While we understand that you are dissatisfied with the quality of education you received, the Federally Insured Student Loan Program cannot excuse a debt on that basis. Since you signed the promissory note, you are fully responsible for the loan balance under the terms of the promissory note.

What can I do if I believe that my school owes me a refund?
Schools are required to make refunds according to their written refund policy. Your contract with the school should explain the conditions under which a refund should be made. The amount of a refund is determined by the length of your attendance at the school. The length of your attendance is the period from the date you began your attendance to the date you officially withdrew, or if you did not officially withdraw, the date that the school determined you had withdrawn. If you attended school prior to January 1990, and completed over 50% of your program, you are probably not eligible for any refund.

If you obtained your loan after January 1, 1986 and you have completed less than sixty percent of the loan period, you may be eligible for unpaid refund discharge.

How long am I legally liable for a defaulted student loan?
There is no legal limit or statute of limitations relating to the collection of defaulted student loans. Unless you qualify for a discharge, you are permanently liable for payment of your student loan.

Authorization
If you wish to contact EDFUND on behalf of a defaulted borrower, the borrower must first complete an Authorization to Disclose Private Confidential Information Form. This also applies to spouses contacting EDFUND regarding their spouse's loan account.

Questions or comments? Check our Contact list for additional assistance.