Went to college back in 97 for about 2 years and ended up dropping out without completing school. Never paid it back (went into default year 2 or 3) so it's been out there for over 6 years now. My question is with it being in collections, does that mean I can haggle my way out of paying the FULL ammount?
Most bad debt gets sold to collection agencies for a fraction of the cost (usually 3% - 5%, 10% at most). Of course the collection agency is going to want the full ammount (that's some nice profit), however they can work with you for a 'settlement' amount.
So did sallie mae sell my loan to someone that I can get away with only having to pay 10% - 20% to make it go away, or am I stuck with paying the full amount?
2007-10-17 15:44:48 · 4 answers · asked by Jeremy M 1 in Education & Reference ➔ Financial Aid
I am going to assume that you are referring to a Federal Stafford Loan.
Federal Stafford Loans are federally guaranteed. This means, if the students defaults on the contract terms and conditions (Master Promissory Note), that the federal government will repay the outstanding debt to the lender. This is why there is no credit check involved for Federal Stafford Loans because there is no risk for the lender--they are guaranteed to receive the loan back in full whether it be from the student or from the federal government.
So, when the loan defaults, the debt is paid by the U.S. Department of Education Debt Collections Services. So, when you refer to the loan as being sold to a "collection agency" that is not true. The debt is taken on my the US DOE DCS. Then you owe the federal government, which can be a very undesirable situation.
So the deductions you are referring to are simply not possible. You must pay the debt in full to the US DOE DCS, plus any applicable interest that has accrued and capitalized the entire time, plus any default and processing fees that have been applied for transferring the loan from your lender to DCS.
Now, it is a common practice for the US DOE DCS to sell these loans to other independent debt collection agencies, but from my experience working with students with defaulted federal aid debt, there is usually no way out of paying the debt in full.
2007-10-18 11:09:54 · answer #1 · answered by superstar_81882 5 · 0⤊ 0⤋
1
2016-10-23 23:16:16 · answer #2 · answered by ? 3 · 0⤊ 0⤋
Your choice NOT to pay back your student loans will cost you DEARLY. You will be paying back a much LARGER amount that you originally borrowed due to various collection fees court costs etc. You should work on connecting whoever has your loan and start working at paying it back solution. Your wages can be garnished and your tax return refunds will also be withheld. Federal student loans CANT be filed under bankruptcy so you will be paying 100%+ of it back.
2007-10-21 13:25:46 · answer #3 · answered by John 3 · 0⤊ 0⤋
You lucky bastard! Good luck to you! Hopefully federal loans won't come back to bite you in the ***.
2007-10-17 16:58:42 · answer #4 · answered by thatgirl90 2 · 0⤊ 1⤋