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Past due on Perkins Loan, forbearance recommendation and history of mental health issues

geokjrgeokjr 7 replies1 threads New Member


Background: After completing his first semester (Fall 2017) at The George Washington University, my son withdrew from all classes early in his second semester (Spring 2018) due to mental health reasons. Early in the beginning of his third semester (Fall 2018), The George Washington University allowed my son to take a retroactive leave of absence in order to save his institutional aid. His psychiatrist and psychologist have not cleared him to return to The George Washington University.

Recently, my son received a letter from Heartland/ECSI that began: “This letter is to inform you that your student loan account with The George Washington University is 90 past due in the amount of $243.00 (as of September 3, 2020). Based on the terms of the promissory note you signed, you have agreed to make payments on this loan…”

Following are excerpts from a chat with a "customer advocate" at Heartland/ECSI this evening:
• H/E: Your account has received a $3 late fee and 30 day past due credit report. You may apply for a forbearance beginning 04/2020 to remove the past due principal and negative credit report.
• You: Wow, you already notified the credit reporting agencies?
• H/E: That is correct. Your account went into repayment June and it received a negative report for that payment. Your account is currently 3 months past due. Your school requires you to use the Mandatory Forbearance form.
• H/E: I advise you to apply for a forbearance beginning 06/2020 to remove the delinquency from your account, remove the negative credit report (s), and bring the account current. Here are the instructions to locate the form and upload for processing: [Snip]
• H/E: Great, happy to help you today. This will remove the delinquency and negative report. I want to thank you for using HECSI Live Chat. Have a nice day!

Should my son follow the advice of the Heartland/ECSI customer advocate or should he engage Student Accounts or Student Financial Aid at The George Washington University for guidance?

I simply have no idea how to advise my son on this.

Thanks!

GeoKJr
17 replies
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Replies to: Past due on Perkins Loan, forbearance recommendation and history of mental health issues

  • thumper1thumper1 78810 replies3556 threads Senior Member
    @kelsmom?

    I would start with the college...but really, your loan servicer is the one calling the shots.

    Perkins loans are a little different than other federally funded loans.

    And checking for clarity....are you saying your son hasn’t been enrolled in college since sometime in 2018?
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  • kelsmomkelsmom 16296 replies99 threads Senior Member
    I don’t understand this timeline, to be honest. If the last time he was enrolled at least half time was early in 2018, his loan would have gone into repayment in early 2019 at the latest (9 month grace period). I guess it’s a good thing that he is only considered a few months past due, rather than in default. I don’t see that your son has any cause for appeal with the school. He borrowed the loan, it went into repayment, and he didn’t pay. They are offering a way to get current with minimal impact on his credit score. Sounds like a good deal.
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  • thumper1thumper1 78810 replies3556 threads Senior Member
    I just read this again....do you not have $243? Is that the total you owe, or is this the interest and penalty?

    If it’s the total, and you can....just pay this loan in full.
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  • Erin's DadErin's Dad 34185 replies5019 threads Super Moderator
    edited September 10
    My guess is that's the first month repayment of the loan.
    edited September 10
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  • thumper1thumper1 78810 replies3556 threads Senior Member
    @Erin's Dad

    My kid had $28,000 in federally funded loans and the payment was about $248 a month.

    This kid was in school three semesters. Perkins Loans typically were less than $5000 for a full year. I can’t believe he had Perkins loans in three semesters that would require a $240 some dollar payment each month.

    Hoping there is a clarification!
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  • twoinanddonetwoinanddone 25255 replies20 threads Senior Member
    This letter is to inform you that your student loan account with The George Washington University is 90 past due in the amount of $243.00 (as of September 3, 2020).

    It sounds like at least 3 payments (90 days past due) and that may include some of the late charges. Are the payments $81/month?

    Perkins loans are no longer made, so it would probably be best to just pay this off as fast as you can. Make sure the amount borrowed is correct and set up one of the payment plans.

    It's not clear from the first post if the loans were backed out when the student withdrew from the second semester. If the school charged something for that semester (board, room, partial tuition) they may have left the loans in place to cover those. See how much you borrowed on the Perkins loan and confirm that is correct.

    My daughter has Perkins loan being serviced by Heartland. The statements are pretty comprehensive on what the original amount borrowed was, the amount going to principal and interest each month, and the charges.
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  • geokjrgeokjr 7 replies1 threads New Member
    thumper1 wrote: »

    I would start with the college... but really, your loan servicer is the one calling the shots.


    I did not realize the loan servicer called the shots for Perkins loans. I thought I read somewhere they were simply implementing the institution's instructions for this type of loan. Thanks for clarifying that for me.

    thumper1 wrote: »

    And checking for clarity....are you saying your son hasn’t been enrolled in college since sometime in 2018?


    Here is my son's post-secondary academic "record"...

    Fall 2017 - 1st Semester GWU - Enrolled as a F/T Student - Completed semester with As and Bs

    Spring 2018 - 2nd Semester GWU - Enrolled as a F/T Student - Withdrew from all classes for mental health issues

    Fall 2018 - 3rd Semester GWU - Enrolled as a F/T Student - Before he had to withdraw from all classes for mental health issues, GWU allowed him to take a leave of absence retroactive to August 2018

    Spring 2019 - Enrolled in a 3-credit course at a local 4-year college as a non-matriculating student - Withdrew for mental health issues

    Fall 2019 - Did not enroll in any classes

    Spring 2020 - Took a 3-credit course at a local community college as a non-matriculating student - Completed semester with a very high A

    Fall 2020 - Taking 12 credits at the same local community college as a non-matriculating student
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  • thumper1thumper1 78810 replies3556 threads Senior Member
    edited September 10
    @kelsmom can comment...but I believe your son, for loan repayment purposes, has not been a student since 2018. To have loans not enter the deferral period, the student needs to be enrolled at least half time in college.

    @kelsmom can tell you if this enrollment needs to be as a matriculated student.

    I suggested you start with the college because this is a Perkins Loan. So...start there. But as @Kelsmom note, your loan servicer is giving you an opportunity to deal with this...and that is very worth your consideration.

    What is the total amount owed? Is there any chance you can just pay this loan off?

    ETA...good luck to your son this term! It sounds like he is re-entering college slowly and carefully. I’ve often said...college isn’t a race. It’s a journey. And college will always be there in the future.
    edited September 10
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  • geokjrgeokjr 7 replies1 threads New Member
    kelsmom wrote: »

    I don’t understand this timeline, to be honest. If the last time he was enrolled at least half time was early in 2018, his loan would have gone into repayment in early 2019 at the latest (9 month grace period). I guess it’s a good thing that he is only considered a few months past due, rather than in default. I don’t see that your son has any cause for appeal with the school. He borrowed the loan, it went into repayment, and he didn’t pay. They are offering a way to get current with minimal impact on his credit score. Sounds like a good deal.


    Might GWU have followed a different timeline for a leave of absence such as the one granted my son in August 2018 versus a student withdrawing from classes or simply not returning?

    In any case, I agree with you. The forbearance and removal of the derogatory entry on his credit report is a really good deal.
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  • geokjrgeokjr 7 replies1 threads New Member
    thumper1 wrote: »

    I just read this again....do you not have $243? Is that the total you owe, or is this the interest and penalty?

    If it’s the total, and you can....just pay this loan in full.


    Heartland/ECSI said their approval of the forbearance will "remove the negative credit report". It is my understanding that paying off a bad debt does not automatically "remove the negative credit report" rather it simply results in a new entry being made that says the bad debt has been paid.

    I will check with Heartland/ECSI to see if there are any advantages of paying off the loan in full, which will cost about $1,000, versus applying for the forbearance and once granted, turning right around and paying off the loan in full.

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  • geokjrgeokjr 7 replies1 threads New Member
    Erin's Dad wrote: »

    My guess is that's the first month repayment of the loan.


    $243 = $120 for June 2020, $120 for July 2020, and $3 penalty/fee.



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  • geokjrgeokjr 7 replies1 threads New Member

    @twoinanddone

    My son and I will visit his university student and financial aid accounts, confirm all outstanding amounts and clean this up ASAP.

    Thanks!

    GeoKJr


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  • geokjrgeokjr 7 replies1 threads New Member
    thumper1 wrote: »

    I suggested you start with the college because this is a Perkins Loan. So...start there. But as @Kelsmom note, your loan servicer is giving you an opportunity to deal with this...and that is very worth your consideration.


    Yes, I will pursue both as you and @Kelsmom advise.

    thumper1 wrote: »

    What is the total amount owed? Is there any chance you can just pay this loan off?


    $1,000 and yes, I can. The only remaining question is: Do I pay it off instead of applying for the forbearance or pay it off immediately after being granted the forbearance?

    thumper1 wrote: »

    ETA...good luck to your son this term! It sounds like he is re-entering college slowly and carefully. I’ve often said...college isn’t a race. It’s a journey. And college will always be there in the future.


    Thanks for the well wishes and encouragement!

    GeoKJr



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  • kelsmomkelsmom 16296 replies99 threads Senior Member
    edited September 10
    It sounds to me like the school did some sort of deferment for your son while he was on leave.

    Your son could get an in school deferment now, if he is taking a course load that is at least half time (he doesn’t have to be formally matriculated). But if you can pay the loan off, I suggest contacting the servicer to get a payoff amount. Get it paid in full right away, and you will have one less thing to worry about.

    I wish your son (and you) the best.
    edited September 10
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  • geokjrgeokjr 7 replies1 threads New Member

    @kelsmom

    Thank you for the advice and kind words.

    GeoKJr
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  • mommdcmommdc 11910 replies31 threads Senior Member
    I would pay it off. I believe with Covid there is 0% interest until the end of the year, not sure if that is only for direct loans or if it covers Perkins loans as well.
    It's not worth messing up his credit if he wants to buy a car or get an apartment in the future.
    If he had loans, he had to do exit counseling and that should have explained the repayment obligations and repayment starting after 9 months, once he was not in school at least half time. Has he received mail or email from them in the last three months?
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  • twoinanddonetwoinanddone 25255 replies20 threads Senior Member
    Perkins loans are not receiving 0% interest under the president's orders. Learned that the hard way when daughter was billed 2 late charges.
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