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DH has a remaining amount of $3007 in a defaulted student loan. Thankfully, that's not a very big loan at all, but it took all our tax refund last year, and I wanted to avoid that again this year, but I'm probably too late. We're finally in a place financially where we can afford to make a small monthly payment of $50 towards the loan, so we just today set that up with the Department of Education. We'll be getting our first bill sometime in the next couple weeks.
I think that the gov't wants to see you pay at least a few months on time before they take you completely out of default. Is this true? If it is, then my question is, can I wait to file our taxes until April 14 (one day before cutoff, lol) and hopefully we'll actually get our refund? Or is it still too late in the game, and they'll take all our taxes this year, anyway? (If they do, I think it would actually pay the loan off, now that we have Caleb to claim. But I'd rather make payments this year, and then use our refund next year to finish paying it off. We could really use this refund right now.)
We had that happen to us last year. We had actually, unknowingly, entered into a repayment plan just days after the cut off. I don't know if there is a universal date or if it varies by loan, but ours would have had to went into repayment on Dec 15th to avoid being collected. We started repayment on my loan on Dec 18th. We submitted our taxes in Feb only to have them taken. We filed a repeal, stating that it was MY loan and HIS tax refund, but we still didn't get our refund. They did not care that I was unemployed and had been since 2008.
The repayment plan was for 9 months, after which I would be taken out of default and eligible for full benefits once again. I am now eligible for financial aid (though I don't know that I'd even accept a loan again after the mess I got myself into) and was able to apply for a forbearance. The forbearance allows me to delay all payments for a year without defaulting. So now instead of paying the $222 they wanted every month, I'm able to pay what I can. They removed the default from my credit report.
We submitted our taxes last week and should receive a refund this Friday if there are no problems. I'm hoping that since I was good this last year that they won't have any problems with it.
Anyway, I hate to tell you bad news and I really, truly hope that what happened with us last year doesn't happen with you. It hurt big time.
If you like, I'll let you know what happens with ours this year.
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Thanks for writing so much, Amy! I'm starting to see that it just won't happen this year. But, in that case, our refund is actually big enough to pay off the whole loan this year, so maybe that's just for the best, rather than making monthly payments for the next two years. I hope they alert us or something, though, to let us know that it's been paid off in full. I don't want them taking more than we owe, but I don't know how to check up on that.
Well, I think it's definitely through a collection agency since it's a few years old. We didn't get a refund last year. This year, since we now have Caleb to claim, we got back a lot more, so it should cover---maybe even with a little left over.