Collection Costs for Rehabbed Loan

[babyarho2010]

I have successfully rehabbed (2) student loans and are due to commence repayment this month. My question is this - has anyone here successfully argued that the student loan servicer remove the "collection costs" as stated in the MPN?

 

My thought is that the collection costs were intended to offset the cost of "ongoing" collection activity - garnishments, judgments, skip tracing, etc., mainly for accounts that were NOT brought current/rehabbed.

 

I may be wrong, but my inclination is this - If I remained in default, (garnishment, judgments, etc.) yes, subject to collection costs. But if I immediately began repayments to rehab - who has earned the collection costs? Certainly not the servicer. I highly doubt that the CA earned/retained the 18% collection fee either. Probably a fraction of that.

 

I know it's in a written contract, but IMO, the fee is usurious. Any opinions? Any experiences with servicers re: collection fees??

 

ETA: I did a search here and it seems that others with direct loans have had the collection fees removed - process advice?? letter??

Edited September 1, 2010 by babyarho2010

[LynnInMN]

I have successfully rehabbed (2) student loans and are due to commence repayment this month. My question is this - has anyone here successfully argued that the student loan servicer remove the "collection costs" as stated in the MPN?

 

My thought is that the collection costs were intended to offset the cost of "ongoing" collection activity - garnishments, judgments, skip tracing, etc., mainly for accounts that were NOT brought current/rehabbed.

 

I may be wrong, but my inclination is this - If I remained in default, (garnishment, judgments, etc.) yes, subject to collection costs. But if I immediately began repayments to rehab - who has earned the collection costs? Certainly not the servicer. I highly doubt that the CA earned/retained the 18% collection fee either. Probably a fraction of that.

 

I know it's in a written contract, but IMO, the fee is usurious. Any opinions? Any experiences with servicers re: collection fees??

 

ETA: I did a search here and it seems that others with direct loans have had the collection fees removed - process advice?? letter??

 

 

Only Direct Loans waive the collection fees...FFELP loans do not.

 

Your guarantor charges the collection fee...the collection agency gets about 7-9% of it. The fee is set by law plus it also stated in your prom note that you would be responsible for all collection costs 'applicable by law"