Get Out of Debt Guy

How Do I Rehabilitate my Wells Fargo Student Loan ACS Education is Servicing?

Posted December 8, 2014
Updated December 9, 2014

WRAL Reader Question

Dear Steve,

I am currently having my wages garnished for a defaulted student loan and am trying to find information on rehabilitation. I am fairly certain that since my financial situation has significantly improved I would be able to successfully make the additional payment required for the first 9 months of rehabilitation to remove my loan status out of default. I am managing financially with the garnishment but my credit score has taken a deep hit and I have to move with my family next year so I worry that a finding a new job and housing will be difficult with an active garnishment and low credit score.

Who do I contact about figuring out whether or not I can rehabilitate my loan? The original loans were through Wells Fargo Education Financial Services but ACS Education Services was the collection agency when my account went into garnishment. I can't find information at either place about it and everything I've read talks about the process but not where to put it into motion. Your help is greatly appreciated.


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I think I've solved your issue. You see, rehabilitation is a tool used for federal student loans and it seems you have a private student loan. Those are a modern kind of special hell.

My advice to anyone considering taking out a private student loan is don't do it. They are a trap. But a trap many schools will gladly and cheerfully push students into so they can get paid for putting butts in seats.

Private student loan lenders have no obligation or requirement to offer any sort of meaningful solution to help with a financial hardship. As proof of that all you need to do is look at the very advice Wells Fargo gives on dealing with a financial hardship.

Here is what they say.

"We may have options that will provide temporary and permanent relief, such as:

  • Short-term payment relief for up to two months as long as you’ve consistently made your loan payments on time
  • Payment relief for up to six months due to financial hardship
  • Payment options if you are already past due on your account
  • Loan Modification Program which may temporarily or permanently lower payment amounts

Please call us at 1-866-878-1083. We’ll discuss these repayment options with you."

As you can see, those "may" offer you some temporary relief.

But it sounds like you were delinquent on your private student loan, possibly sued, had a wage garnishment authorized, and here we are today.

At this point your options are to suck it up and deal with the garnishment or find some student loan consultant or lawyer who actually knows what they are doing when it comes to negotiating these things. In fact here is a recent article from a California attorney who says why this is not the end of the world for many if they act early.

At this point since they are already garnishing your wages I'm not sure what the leverage would be to persuade them to be lenient would be unless you can settle the balance of the debt in one or two really large payments. Private student loan lenders will settle debts, even those with a garnishment for around 60% of the balance.

But if you are a really lucky person then maybe the loans are dischargeable in bankruptcy. See this article for information you will not believe. Private student loans that were used for accredited schools or for expenses other than the cost of attending school, can be eliminated in bankruptcy. That's a fact, Jack!

So, that is all a longwinded way of saying the reason you can't find any rehabilitation information for a defaulted Wells Fargo private student loan is because it does not exist.

Even for a federal student loan, once you are sued by the USA the Department of Justice won't let you go into a rehab.

The lesson to be learned is if you start to have problems managing your student loan payments, read this and act early to develop a plan that has a chance of success.

And by the way, it's stupid easy to rebuild good credit, read this.

Before I go, here are three things you can do right now to tackle your issue. Click here.

Steve Rhode
WRAL Get Out of Debt Guy

If you have a credit or debt question you'd like to ask about, how to get out of debt, just click here and ask away.

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About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.