Defaulting On Student Loans

Defaulting On Student Loans

Please Sign the Change.org Petition! www.change.org Tell Sallie Mae: Stop the Unemployment Penalty I'm Stef, a recent graduate of a public college who took out private student loans through Sallie Mae before the credit crunch. Despite my school's relatively low tuition and my full-time job, I still needed the extra help in order to pay for my rent, utilities, and groceries because my parents had passed away. Sallie Mae loaned me money with a 9.75 percent interest rate because I didn't have anyone who could co-sign. I graduated in May with honors, but even with an advanced degree in a technical field, I still haven't found full-time work. I'm doing everything I can to avoid defaulting on my loans, but Sallie Mae has charged me hundreds of dollars in extra fees because I've had to delay my payments (called forbearance). Federal loans allow the unemployed to defer payments without any fees, so the same kindness is not to o much to ask from America's largest private lender. Since May, I've already had to pay 0 to Sallie Mae in "forbearance fees." ( per loan for every 3 month block. Consolidation is not an option.) Not a dime has gone into my loan principal. Meanwhile, the interest on my loans keeps growing -- meaning that Sallie Mae will cash in two times -- once with the extra fees they're charging me, and again when I pay the interest that accrues as I look for work. As an unemployed person looking for work, I need every extra dollar I have to pay for rent, electricity ...

Sallie Maehem: Practically Everything Wrong with the (Predatory) Private Student Loan Industry

With the economy tanking and health care costs rising, student loans might be the last thing on most people's list of bills to be paid. Education has become a costly venture with 70% of undergraduate students requiring some sort of financial aid in 2008. And, once out of school and out in the "real world", student loans fade into the background of everyday life. But, defaulting on students loans can lead to deeper problems, even if a bankruptcy petition with Denver Bankruptcy lawyers is in the future. Federally funded student loans, such as those obtained from the US Department of Education, can be vigorously pursued for payment by the Department using some powerful collection tools such as:

Additional collection fees Attaching your tax refund Wage garnishment Garnishment of federal benefits Lawsuits

Additional Collection Fees

The loan guaranty agencies that guaranteed your loan can charge you collection fees if you fall into arrears. If the Department of Education hires collection agencies to pursue you for payment, then they charge the Department Education a commission for their collection agents, which is passed along to you.

Attaching your tax refund

Each year at tax time, the loan guaranty agency that guaranteed your student loan reviews your records to see if you are in arrears for more than 90 days. If so, they notify the IRS who then intercepts your tax refund. The loan guaranty agency will then notify you that the IRS will be keeping your refund. This process will go on each year until your debt is paid in full.

Wage Garnishment

The loan guaranty agencies can garnish your wages for payment of monies in arrears.

This means that the agency can order your employer to turn over to them a portion of your paycheck up to a maximum of 15%. However, there are limitations on the amount that can be garnished. The full 15% cannot be taken if it would mean that your weekly income would be less than 30 times the federal minimum wage.

Garnishment of Federal Benefits

Social Security retirement and Social Security disability benefits may also be garnished for loan arrearages. Supplemental Security Income is not affected. The first $ 9000 or $ 750 per month may be taken but the total amount may not be over 15% of your income. If your Federal benefits are not over $ 750, then no money may be garnished.

Lawsuits

The Department of Education can file suit against you for defaulting on your student loans. Unlike some other debts, there is statute of limitations on this and they can sue you indefinitely. However, the Department is unlikely to sue if they deem you have no assets that total the value of the loan or if suing you would cost them more than they would collect.

If any of the above actions have been taken against you and you feel this is in error, contact Denver bankruptcy lawyers. You do have recourse. Notify the guaranty agency within 65 days of date of notice in writing and with evidence that you have:

Paid the arrears in full Are making payments under an arrangement or have been granted a forbearance, a delay or a cancellation. Have become permanently disabled since taking out the loan. The loan is fraudulent and not your loan. Dropped out of school or never attended and the school has not refunded your money. Have filed for bankruptcy with Denver bankruptcy lawyers and completion of the action is still pending or else your loan debt was discharged. Obtained the loan to attend a "trade school" that closed prior to your completion of the course or else you were incorrectly certified to receive the loan.

For further information or to ask for help, contact the Department of Education's Ombudsman for a list of steps you should take to resolve your problems and ask for their help.

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