PHEAA Won’t Get His Student Loans Out of Default – Erin


Dear Steve,

Married to man who defaulted on student loan with PHEAA. Past failed attempt at rehabbing loan. We spoke to PHEAA when they were garnishing his wages and had taken his tax refund (before we were married).

Arranged an increased payment direct deposit to stop the wage garnishment and tax return taking, were told it would also take him out of default. Two years later, no missed payments, loan still listed on credit report as in Default.

PHEAA refuses to change status or provide alternate solution.

What can we do to get my husbands loan out of default status? He has paid religiously for over 2 years, no missed payments and the loan is larger than ever (60K+). It is stopping us from qualifying for a mortgage and buying a house.

The only thing PHEAA will say is to pay it off (cause we have that money in our pocket right?) Please tell me there is a way to get the loan out of default and towards paying it off.

Additionally my husband works in public service and should qualify for loan forgiveness if not for the default status 🙁 Please help!



Dear Erin,

I’m so glad you contacted me. There is so much here that needs fixing ASAP.

I have no idea what payment program PHEAA has your husband on. There are a couple of possibilities.

First, it might just be that the additional payment he made did not remedy the default and is just keeping him out of full default but the loan is not actually current. Or it might be that the loan is now current but the delinquent history is still being reported.

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I’m not sure why the rehab attempt failed but that would have been the best approach to getting the wage garnishment stopped and then after nine payments the loan would be out of default.

See also  I Work in Public Service and Just Learned My Loan Won't Qualify for Forgiveness

Unless the loan is out of default it can’t be enrolled into a qualifying Public Service forgiveness repayment plan.

So my biggest concern here is it is very possible that none of his student loan payments he has made might count towards loan forgiveness.

Under the Public Service Loan Forgiveness program he must be on a qualifying repayment program. That would require his loans to be under a Direct Consolidation Loan and he can opt for an income driven repayment plan that can lower the payment by income.

Payments made while not on this program, don’t count towards forgiveness. And he will need 120 on-time, full qualifying payments to have his loans forgiven.

The issue with the tax refund intercept is easy to resolve. Just don’t get a tax refund. Adjust your withholdings so you get more each month and avoid a refund to intercept. If you do that then you never need to worry about a refund intercept in the future.

Damon Day - Pro Debt Coach

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