All of a sudden, one day my college calls me out of the blue and tells me I've defaulted on a loan. I tell her, no freakin' way... I consolidated all of them and have never missed a payment! She tells me that there is one loan out there (a $2000 loan) that wasn't consolidated.

When I did the consolidation, I called the company (MOHELA) and said I wanted to consolidate all of my loans. The rep went through and picked out all the loans she could and then told me that two of my loans were not available for consolidation through them. I told her ok. She said she will fill out the app and mail it to me and then I can sign it and mail it back. I did so. Only she forgot one of my loans! And since I assumed that she included all of them except for the two she said she couldn't do, I trusted her.

So I call MOHELA and they mail me the application that was filled out for consolidation. It's true... she left it off. The whole app was filled out with their typing and I signed on the dotted line and sent it back.

Anyways, so my college never gets in touch with me about the loan. It is several years later and all of a sudden then call me on my home phone (which is NEW, by the way) to tell me about it. She gives me the number to a collection agency. So I call the collection agency and they say they've been trying to get in touch with me. I ask them what address they were using. He reads one off that is 6 or 7 YEARS OLD! I say,. that's not my address anymore... didn't my college give you my contact info. He says that it's MY FAULT. "I never updated my address with my college." I tell him that he's a liar and he says that even if I updated it with one department, that they don't share info so I should've updated it with all of them (btw, I went to a college of about 900 people). I fight with him for a bit about it and then ask him to send me the itemized bill and a copy of all of the correspondence. He asks me... "Should I send it to *insert more current address here that I NEVER TOLD HIM*." I say, "You had that address on file?" He says yes. I say, "That's my sister's address. If you would've sent the correspondence there, I would've gotten it!" He stutters around trying to answer me because he knows I'm right.

So then he gets into the "finance charges." THEY HAVE CHARGED ME OVER $1000 IN INTEREST AND OTHER CHARGES!

I am furious at this point. I tell him I am not paying him a penny of his charges, but he can send me a copy of the itemized stuff and I fully intend to pay back the loan and even the legitimate late charges and interest... but none of the other BS.

THEY NEVER SEND ME THE PAPERS (and it's been about 2 months and I've called several times and they DO have the correct address).

So I call my school two days ago and she sends me a copy of the stuff she has...

Take a look at it:



See all those finance charges highlighted in yellow? They tacked that extra $100 ("institutional") on recently (since I have called them).

Ok... so they picked the older address on purpose, never mailed me what I asked them to on several different occasions, and now they expect me to pay them over $1000 DOLLARS EXTRA ON AN F-ING $2000 LOAN!?!?!?

I am seriously about to pop a blood vessel.

Someone help me.... anyone have experience... what are my options?

Notice that everyone is responsible for your default but you?

That's why you defaulted.

This is not something that I am disputing.



I did update my address. In fact, this is a KEY issue for me. The collection agency even had it on file! He read it to me during a phone call and I had never told him about that address! Is there not a regulation that requires them to mail out to the most current address on file?



Even though I agree with you here, there has to be some sort of law that the collection agency abides by as well. Or is it just a free for all? Heck, why can't they just charge a million dollar fee whenever they feel like it, if that's the case? Ok, enough sarcasm, but seriously...



Right, the correct address was on file. And they did not use it. And they still haven't used it! (I requested copies of all of the information, correspondence, itemized billing, etc. to be mailed out several months ago and they still have not sent it to me, even after repeated phone calls). I am not disputing the late fees or even the interest accrued, but this fee of over $900 and the fee of $100 is ludicrous. There has to be some limit... some recourse... something that is set up to take care of the borrower in cases like this.

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Ok, all of that aside, maybe someone can help me with what I'm really looking for. How can I get this fee eliminated or lowered? I don't feel that it is fair for a company to decide all of this stuff without contacting me and to be honest, I am still a young student that is planning on trying to finish my school. I can't afford to pay fees for things like this.

You will find that "fair" and "student loan" don't often meet in a conversation about default. You basically have no recourse here. Take your medicine and pay the bill, otherwise you may find yourself in an even less comfortable position.

Best of luck toyou.

I posted on another forum and talked to some people and I think I'm just going to end up reconsolidating.

I've realized in this situation there is only one loser, no matter who is at fault, and that is me.

Now my question is, I already consolidated all of the previous Stafford sub and unsub loans into one with MOHELA. Am I able to reconsolidate and include this one in with all of that?

If I can't reconsolidate, I will probably end up trying to settle with them and pay the amount in full with a credit card or something.

And if that doesn't work I guess they'll just have to stick me on a 10 or 20 year payment plan.

Thanks.

Collections do not offer 10-20 year payment plans, and neither does the school once you defaulted. They will want it paid off quickly since the account agreement you had on the prom note is that you would pay in full on demand.

Your best bet in the long run is to rehab the loan. That will get the default off your credit, restore your federal student aid eligibility, and reinstate your right to a payment plan and deferments and forbearances if you qualify.

Well, the good news is that it's not ON my credit report. I would have noticed it a long time ago for sure if it was because I do check my credit report ever few months.

Forgive my newbie status, but what do you mean specifically by "rehab?" Reconsolidate? Use another form of debt (credit card, whatever) to pay it off and then start paying in that? Is reconsolidation an option since I have already consolidated all my Stafford loans once?

I've sort of been on my own since the beginning regarding these loans so I appreciate all the help.

Thanks!

Well, dear, that was a bit of a joke.

But regardless, is settlement an option? I know other creditors will accept a settlement just to get the thing paid off... do student loan creditors do the same?

Settlements do happen in student loans but not for that much. With Perkins, they wont waive any principal and interest, and will only settle of on part of the collection fees. The school won't want to take the hit in their pocket. Also keep in mind that anything settled over $600, you will will receive a 1099 next year and it will cost you in taxes.

Hmm in that case I might try to take that route. I don't want to skip out on part of the principle or even the interest and late fees... I would feel wrong about that. I borrowed the money and I should pay it back.

It's just the exorbitant fee of approximately $900 and the $100 fee that I am frustrated about. I know they won't eliminate that fee in it's entirety, but if I settle with them for even HALF of the 900, I guess I'd be happy. Hopefully the prospect of me paying it off immediately would cause them to go for even less than that, but we'll see. She keeps claiming that none of the fees are assessed by their agency, but by the school, but I find that ridiculous. They have to be making some money off of it. Or else they wouldn't be in business. But I'd have to look into finding a low interest rate personal loan or credit card to pay it off. I'm not worried about missing those payments because I really do have a good credit history with a score of almost 700, so I think this may be the best chance I have.

Thanks for your help.

Right on the statement that you included from the school says the contingency rate which is 30%. This is not exorbitant in the Perkins loan collection world....it can go up to 50%. The school has to hire a CA thus Perkins fees are much higher than Staffords. Technically the school is charging you the fee since that is what they have to turn around and pay the CA. The $100 is an internal fee at the school.

I calculated, and the amount owed should actually be about 4k.

simple interest at 5% per year, no capitalization
at least 9 late fees at 8.00 each
24% per year since default in reasonable collection costs, no capitalization

Generally speaking, if you consolidate and find you have another loan still hanging out there, within 180 days of your original consolidation the loan can be added to your original consolidation.

If all of your loans are federal student loans, I would suggest you google for "direct loans" and look at the .gov address that comes up. They were able to consolidate federal loans in default, which was a real life saver at the time and the entire thing (about 30k) is at 7.25%.

We're having to add a forgotten loan on now as we speak, which is how I know you can add another one onto the original consolidation if you catch it in the first 180 days after consolidation.

Just FYI - they never sent us anything, not one slip of paper, about this loan that is still out there. I found it after logging into the consolidation website and it listed another loan that was federal but not consolidated.

They really helped us out of what could have been a horrific situation.

Sorry that, in the post above I failed to notice this was years later and that its already at a CA. Ignore what I said.

I'm not sure this is a student loan issue anymore, its more likely a collections or credit issue. If they are reporting on your credit, and you are dealing with a collection agency, you are far past the point of determining whose fault it is, and with the amount in question being only $3k, I'd say you should make some arrangements to pay it and try to get the most favorable terms for your budget and especially for your credit report. If your score is in the 700's I'd try to protect that as much as you can.

Seems to me with a score in the 700's you could make lemonade and get a loan...