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Home > Reader Questions > Account Control Technology Wants Me to Get My Student Loans Out of Default. – Chelle

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This is information that was submitted by a third party and not generated by or Steve Rhode.
  • Msullivan


    Your question is a bit involved for an email answer, but I’ll share a few thoughts.

    First, ACT is a collection agency and they want to get you to repay your debt. Yes, there is a part of the William D. Ford program for addressing loans in defaults and you may be able to get things straight in this way but you would not do that through a collection agency. Go back to the guarantor of you loan and ask about getting a new loan.  Don’t expect to get a loan for more education while you are in default on another loan. Loans in default cannot be reduced due to income limits.  Call 1-800-4-FED-AID (1-800-433-3243; TTY 1-800-730-8913) to discuss the possibility of income based repayment following a new loan..

    You do need to act soon. ACT is not in business to be nice to you and if you don’t take some action they will. As soon as you start working they will garnish your wages and if you wait long enough they will garnish your Social Security income. 

    Good Luck!

    • Mmyelvington

      Thank you for your reply. I did call the number you provided and they referred me to the federal direct loan agency at 1-800-433-3243 and I asked the representative all of my questions. She verified that all of the statements that the loan coordinator at ACT were actually true. It takes approximately 8-12 weeks to process the application (and the appllication that ACT sent to me is the same application that the federal direct loan agency would have sent me) and once processed, my loans will be out of default. She advised me to select the income contingency option and that my payments would be adjusted based on wages earned or be zero if my yearly income is below the federal poverty line. Additionally I will be able to apply for more grants (& loans if I was completely out of my mind) to go back to school once the application has been processed. Hope this info helps anyone else in this situation.

      • Steve Rhode

        Sounds like you got some great advice and help. Keep us posted.

      • CollectorZer0

        With all due respect, he got terrible advice. Msullivan only gave the original poster a # to call that any A.C.T. employee could have given to verify all the information he was told.

        Msullivan told the original poster not to trust A.C.T. and then was slanderous implying that bill collectors are terrible people.

        He said that addressing the OP’s loan would NOT be done through the collection agency, which is also wrong.

        The best advice to give anybody in debt is to just be polite. The collector wants to help you get out of debt just as much as you want to be out of debt. It’s a service industry.

        The theme of any collection agency I’ve seen has been respect for the clients. Corporations that collect on debt understand that situations happen to where people fall behind on bills, the job of the collector is to help find a solution to a problem by offering payment plans, payment options, government programs, or even settlements.

        Some borrowers are rude, heartless, and thankless people who see collections as a burden. I will never understand people who will use a service, and then not pay for it, then get upset when the bill is due… Do these people do the same thing at restaurants? Or after a car repair?

        But then there are people who have all the intent in the world of getting things straightened out and leading a life as a polite and decent member of society. I am on a first name basis with all of them and remember parts of their lives without any computer.

        Rarely I will get a call after the debt is paid or I’ll receive a letter thanking me for my time and effort month after month keeping up to date with someone Else’s situation, but that’s what makes the job worth while.

        The top collectors I’ve seen are mothers. Caring and patient, but they also are guiding and can be firm when need be. 80% of the collection workforce is female and it’s not because they’re demanding or rude like collectors are often portrayed.

        Again I leave with: “The best advice to give anybody in debt is to just be polite. The
        collector wants to help you get out of debt just as much as you want to
        be out of debt.”

        -A student loan collector

      • Steve Rhode

        I totally agree. There is no need to be rude and it can pay dividends to work cooperatively with a collector.

        Do you collect on private student loans?

      • CollectorZer0

        I do. And I’m always nice about it .

        People don’t realize how easy it is to talk to a collector and how beneficial it can be. Like I said, the last thing a collector wants is wage garnishment or having to withhold taxes. We are willing to work out something manageable. I have about 70% of my clients on plans that only cost $5 a month. Anybody can call the Department of Education and ask about it, it is an honest and legal system set up by the United States Government to try to help people out.

        If anybody needs help with advice on student loans, I’m the guy.

      • Steve Rhode

        So what advice do you have for people who need help with private student loans like an IBR or how to best settle a private student loan and what to expect.

      • Kaisa

        I was just called by ACT today, for defaulted student loans. I was also told that: 1. I could be considered a “hardship” case and arrange a payment I could afford (9-10 mo.); 2. When plan was completed, the default would be removed from my credit report, and I could then make payment arrangements with the lender as a borrower in good standing, including deferment; 3. They had to have 3 references (peeps I don’t live with) before they could give me an estimate. Here’s my question: do they collect interest? Will my interest rates go sky high after the rehabilitation period? This is my first communication with a collection agency. They were very polite, but I don’t know if I can trust them, or where I should seek advice.

      • Steve Rhode

        I’m not aware of any penalty interest rate but interest will continue to accrue. Since this is a government backed loan (and you very lucky it is) the process is fixed. If you ever have any concerns or want to very what the outside collector is telling you, feel free to verify the information directly with the Department of Education collections unit. 1-800-621-3115

        The collector should not mind that you verify the information since it will help to ease your mind and move forward cooperatively.

      • LEOinFL

        Yes, they asked me for 2 references as well and said they could not enroll me in some sort of program that would help me without them. I was like… I’m sorry, I’m not giving you contact info for people I know that don’t even know I am in default for a loan, nor is it their business. That was the major issue I had. I told the rep I am more than happy to pay my amount per month, and I will, but I’m not giving “reference” info. I am paying on time monthly now but did not enrolled in whatever it was.

      • LEOinFL

        I have been paying $50 monthly for almost year now. IT has been debited automatically taken out of my account. The fed gov (I guess it was them? Not ACT LOL) took my tax year. Will they take it this year?

      • Sondra

        Can you update us on the status?

    • Serp

      Actually, you’re wrong, sorry.
      The Department of Education contracts A.C.T. to collect on your loan, so contacting the Department of Education will only get you redirected back to A.C.T.

      Secondly, A.C.T. tries to be as friendly as possible to any borrower. Dignity and respect are far more likely to help someone understand their situation and options they have to remove their debt from default.

      Wage garnishment is the last resort for collections. If your account is placed into wage garnishment then the company who is collecting on your loan gets nothing above what the Department of Education would pay for a collection fee, which is barely enough to pay employees for the time used to try to help someone get their life in order.

      Student Loan rehabilitation is a very common program from the department of education since 17 trillion dollars in student loans are in default currently. The government is trying desperately to get people to start making payments, even if they’re small.

      You are right, don’t expect to get a loan while in default, you said it yourself, but Student Loan Rehabilitation removes a loan from default after 9 months and the borrower would be eligible for chapter 4 again.

      Collectors have a bad image due to people like you who don’t know what they are talking about. A lot has changed since the 60′s. People who have a pleasant experience don’t tell their friends about how nice the collector was who helped them get their life in order, but the ignorant person who just hangs up the phone constantly and is nasty will always tell everyone they know how “terrible” collectors are. It’s the fault of the consumer, not the collector.

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