What happens when you default on a Sallie Mae loan???

[smiles32070]

Good day!

 

My son attended the Art Institute in Philadelphia which he took out a loan for with the help of my mother; she cosigned for him. During his time in school (which he took longer to graduate than anticipated) we never received any notices regarding repayment and interest; not sure why, but because I am a student with loans and don't receive notices it didn't seem odd. Right before it was time for him to complete his internship we began to get notices that he was going into default for nonpayment. Again, I am a student and have been for the past 10 years (working on my PhD) and have never been asked to repay loans as long as I was in school. We had no clue he was supposed to be paying on these loans. Needless to say there were late fees and so forth added to the loan. Moving forward we learn that he had approximately $40,000 loans to cover an education that was supposed to cost about $15-20,000; and on top of that, to date the principle balance is approximately $40,000.

 

My son never did graduate because of the current loans which made it difficult to even want to borrow anymore; nothing but internship left and he was unable to proceed. When speaking to Sallie Mae they stated that my mother forwarded her electronic signature for the loans; she would not have approved the amounts exceeding the cost of the program....and only signed for three to both our reollection. Also, we found out that the school charged my son for two programs....one that he changed after realizing he was in the wrong field. Since school he's help odd jobs but have not been able to really begin his career; my mother with her own responsibilities and student loans did all she could to help him make the payments he has made thus far; and my having financial difficultties also participated in trying to keep the loan from going into default we have gotten very little help from Sallie Mae. They have harrassed my mother to no end, and they are extremely rude. The payments continue to get higher, and the late fees continue to pile on, and regardless of how cooperative we are we cannot get a break. The enitre family has gotten involved, they have everyone's information and harrass us all; calls from sun up to sun set and beyond, and with all the harrassment no one is willing to help.

 

So, to my main question....my mother is now retired and my son just finished up a temporary position and looking for work again. Today a payment is due and we do not have it; my mother was told that if this payment was not made the loan will go into default and Sallie Mae will be after her hom, her income tax, and her retirement income. My mother shares a home with my father who's name is also on the mortgage so she is very worried; in fact borderline depressed. We cannot keep up with this loan at the monthly rates they are asking...it is going to default.

 

Please, someone tell me what happens when this loan defaults? What should we expect to happen and in approximately what time frame? I cannot tell my mother not to worry and it will be okay when I hear Sallie Mae make such threats. What if anything can I or she do to protect her home and income, especially considering that her husband shares in ownership?

 

Thank you in advance for your help!

 

Smiles32070

[LynnInMN]

Your son has private loans....are your loans federal or private?? They are two very different types of loans. Private loans only defer while he is in school...internships are not always covered...you would have to read the prom note. As for notices, he may have opted for emailed statements/notices. Did he have federal loans as well??

 

Once the loan defaults, both parties can be sued. Hard to say on the timeline. Property will be leined, they may attempt bank account levy. They cannot touch income tax returns for non federal loans.

 

Really your son should be working whatever jobs he can find right now. He should have been aware of the interest on the account and should have asked how much the payment were going to be. Interest has been accruing since the date they dispursed.