Rehabilitation vs Consolidation

[daktwink]

I have recently consolidated a portion of my student loans. It reduced some of my fines and has added a positive comment on my credit report and also has left a negative mark. I am also going through a rehab program with PHEAA. I am getting close to a year of payments and want to understand how a collector adds fees? Isn't it on the remaining principal? if I were to settle beforehand would I save money? Please share all knowledge on rehabilitation, thanks!!
I think the loan was originally for about $7000 but now with fees and interest exceeds $10,000 - how much of this can I get reduced?

[melissadas]

18.5% interest is calculated on the remaining pricipal balance of the loan. Yes you can save money by negotiating a payoff and refinancing with another bank. I was offered 2,000.00 less than I owed $1,005.00 of it being collection costs. I choose the rehab because they will not take your tl off your report and I have 2 years before it falls off. For me it was better to get it off my report. Plus 18.5% is less than the collection costs and I have the option to prepay with rehab with out penalty and a lower payment if I would like one. I also would get them off my report and a good trade line added. Hope this helps.

[awolcott]

Unfotunatly PHEAA probably will not settle an old debt - They are responsible for the money owed to the Department of Ed and the governemnt usually requires it to be paid in full. Now if the loan has already defaulted and is at the gurantor then you should rehabilitate the loan and have the original lender look at purchasing it back.
As far as interest rates go dependant on the year the loan was originally disbursed - you will follow the federally issued interest rate.

Let me know if you have any questions - also if you can prove that you were unemployed or had restricted income during the time that you defaulted than it is required that the lender remove any negative reporting.

-Adam