Quick Answer: Hinson-Hazelwood CAL loans can help or hurt because they provide Texas students with alternative educational funding when federal aid is insufficient, but defaulted loans result in judgments with accumulated interest and penalties that are difficult to resolve. William’s $49,161 loan grew to $59,388 after six years in judgment, with limited forgiveness options compared to federal loans.
“Dear Steve,
I have a loan in Texas (CAL Loan) that went into Judgement about 6 years ago. The principal on the loan is $49,161.47. With Interest and penalties the loan totals $59,388.38. I was under the impression that this was a federal loan, however I have come to understand it is not a federal loan. The lender is Hinson Hazlewood. I had all my federal loans consolidated when I graduated, this loan was left off and I did not pay on it for a few year thus going into Judgement.
Is there any way I can remove the judgement from my record?
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Is there any loan forgiveness for this type of loan?
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Is there any way I can negotiate or even remove the interest and penalties?
Any help would be much appreciated.
William”
Dear William,
For those who may be unfamiliar with the Hinson-Hazelwood CAL loans, they “provide alternative educational loans to Texas students who are unable to meet the cost of attendance. The CAL may be used to cover part or all of the student’s Expected Family Contribution (EFC). Students do not have to demonstrate financial need. However, the amount of federal aid for which you are eligible (regardless of whether actually accepted) must be deducted from the cost of attendance in determining the CAL loan amount.” – Source
When it comes to repayment, they list the options as:
- Loans have a six-month grace period from the date a borrower ceases to be continuously enrolled as at least a half-time student at an eligible institution;
- Principal balances under $30,000 have up to a ten-year repayment period with minimum monthly payments of $50;
- Principal balances of $30,000 or more have a repayment period up to 20 years;
- The loan will not be sold to another lender;
- Postponements of loan repayment and income-sensitive or graduated repayment schedules are available.
The loans do not appear to have any forgiveness options.
But when it comes to a judgment, that is a legal matter and you should talk to an attorney licensed in your state for specific legal advice.
Generally, a judgment occurs after you have been sued. The lawsuit and the judgment are a matter of public record and credit bureaus are entitled to report public records.
Once a lender has a judgment they may be inclined to entertain some settlement of the debt or an agreement where they would recover 30%-50% of the debt now, rather than wait for it or garnish your wages. In Texas while wages can’t generally be garnished over consumer debts, they can be garnished for child support, alimony, taxes, and student loans. – Source
At this point you can either attempt to negotiate with the lender yourself or you could enlist the help of a knowledgeable professional to negotiate a solution on your behalf.
However, I would expect the suit and judgment to remain on your credit report. That’s not the end of the world. What you should focus on is rebuilding your credit and bringing your credit score back up.
Please post your responses and follow-up messages to me on this in the comments section below.
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Question answered.