For anyone trying to repair credit, student loan debt can be a huge problem.
Here are some sobering facts:
- 50 million people are feeling the impact of student debt.
- The total of that debt is nearly 2 trillion dollars.
- If you do the math: that means each student owes an average of $37,000.
That’s a lot of money!
These loans affect your credit is very much the same way other loans do. If you pay as agreed, it’s great for your credit. But if you pay late – or go into default – it can severely damage your credit and your credit score, and ultimately hurt your chances toward your future dream car, dream home, and dream life.
I’ve helped a lot of people through this and really understand the pain of this terrible system. So I’m going to open my playbook to remove student loans from your credit report, once and for all.
What are Student Loans?
Student loans are installment loans. You pay a specified amount for a certain time period. The lender reports this to the credit bureaus, and you begin to establish a track record.
There are two types of student loans, private and federally subsidized student loans.
The concept behind these loans is mostly the same. However, if you’re late on a private student loan, you have 30 days before it goes delinquent and it is reported as late, whereas Federal loans won’t report you as late until 90 days have passed.
The thing is, once you're reported as delinquent, most people aren’t aware of the options they have.
The student loan remains delinquent until you repay all past due payments
Of course, disputing with the bureaus or the furnishers is always an option, but if the accounts are delinquent and still reporting late payments, being successful in deleting the accounts from the report is usually only a temporary fix.
It’s temporary because the furnisher will usually re-report the past due student loan again and again and again. You can’t fix this one with a bandaid, you need to do something more effective.
Different repayment programs can:
- help people pay when they’re ready
- assist with repayment, otherwise known as repayment plans
- provide student loan forgiveness
- give you a means to defer your loan repayments, which you may have heard of as loan deferment or forbearance
- get your loans federally subsidized
- And — provide options for refinancing and consolidating your loans.
With student loans, most lenders have programs specifically for people that cannot pay now, but have every intention of paying once they find a job or get through their hardship. And sometimes that’s the most viable option.
Sometimes income can play a role in lowering your debt. Federal student lenders have different types of repayment plans that may allow you to pay less than required, which is based on your current income. This is a great option to explain to your clients because after a few on-time payments, in most cases, the lender will re-age the accounts. Even better: sometimes they will even remove some of the late notations, which is awesome.
Better yet, check out whether you can qualify for student loan forgiveness programs if you have a federally subsidized student loan. This is where you no longer actually owe the debt, so you should totally pursue this option if available.
Loan deferment is also sometimes available by Federally subsidized loans. Deferment means holding off, so this is where your clients may be able to put the payments on hold for months or even years. You also can check out their forbearance programs that help you for a shorter period of time.
Private lenders don’t have loan forgiveness options, but they usually have different plans available including refinancing and consolidating the loans.
Really, the best thing you can do for your clients with student loans is to give them knowledge and guide them to get the accounts under control.
Is there an exact strategy for disputing student loans?
The answer is yes, and it’s simple!
I asked a good friend of mine, who also happens to be one of our Credit Repair Millionaires Club Members. His name is Bruce Politano.
Bruce is known as the student loan guru. He’s helped thousands of clients with their student loans and even teaches business owners how to help their clients with student loans.
- The secret to addressing student loan debt is NOT to dispute them right away!
So, here is Bruce’s proven method of attack.
- First, consolidate.
The two types of student loan consolidation are federal and private. They are often confused, but they are very different!
- Federal student loan consolidation combines multiple federal loans into a single federal loan through the Department of Education. You may need to consolidate to be eligible for some federal loan repayment programs, but federal consolidation won’t lower your interest rate. It may lower your payments by extending them. You can find more information on federal loan consolidation here https://studentaid.gov/app/launchConsolidation.action.
- Student loan refinancing, which is also called private student loan consolidation, is a financial move you do through a private lender. If you qualify, you can save money by getting a lower interest rate.
- Next, dispute.
Once the new consolidated loan is reporting and the old ones (that need to be disputed) are reporting paid and closed, that’s when Bruce says to go ahead and dispute them.
- Try going direct.
The other tactic that works really well for Bruce is to try disputing directly with the furnisher and demand the promissory note. The promissory note is the “instrument of indebtedness.” This is the proof that you owe the debt and will include the agreed-upon terms between the two parties, such as the maturity date, principal, interest, and issuer's signature.
- Now, demand a DELETION!
At that point, if they can’t provide it, you should demand a deletion. And often, this is just the right strategy that results in a removal!
This strategy can work well because it uses statutes from the Fair and Accurate Credit Transaction Act, or “FACTA” for short. Under FACTA section 312, you have the right to dispute directly with the original creditor.
That’s exactly what Bruce does – he sends a dispute DIRECTLY to the original creditor. In your letter, ask for the contract that was signed where the borrower agreed to pay, and be sure to mention FACTA section 312.
Remember, this is a critical step in removing student loans and it works more often than not.
It’s a logical method, primarily because student loans are really difficult to get rid of or repair, at least until the borrower becomes current. By getting the loans under control it opens the door to removing the negative history permanently.
So that’s it! With the right steps and letters, you CAN take the power away from student loan lenders and back into the hands of the people they’ve hurt!
Now you have another building block you need to start your own credit repair business, and that’s EMPOWERING!
So, if you want to get certified in disputing and launch your very own credit repair business in just a couple of weeks, I invite you to join our Credit Hero Challenge!
It’s an amazing program that has helped tons of Credit Heroes get their first clients, get certified in disputing, and gain confidence in knowing they are launching their credit repair business on a solid foundation that allows them to grow and scale FAST!
We’re starting again soon, so SIGN UP NOW at creditherochallenge.com!
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