Help with defaulted Student Loans

There is a whole other forum on this site about student debt and options available for controlling it.

Facing Loan Default

For student loans authorized under Section 435(i)Title IV of the Higher Education Act, default occurs on a Federal Family Educational Loan (FFEL) program loan after a default has persisted for 270 days in the case of a loan repayable in monthly installments or 330 days in the case of a loan repayable in less frequent installments. The change is effective for loans for which the first date of delinquency occurred on or after October 7, 1998. During the delinquency period, your loan holder must exercise "due diligence" in attempting to collect the loan; that is, your loan holder must make repeated efforts to locate and contact you about repayment. If your loan holder????????s efforts are unsuccessful, steps will be taken to place the loan in default and to turn the loan over to the guaranty agency in your state. Your loan holder may "accelerate" a defaulted loan, which means that the entire balance of the loan (principal and interest) becomes due in a single payment.

Once your loan is assigned to a guaranty agency or the U.S. Department of Education (Department) for collection, the following steps may be taken to recover the outstanding balance due:

The U.S. Treasury may offset your Federal and/or State payments to repay your defaulted loan.

You may have to pay additional collection costs after your loan is assigned to a private collection agency for collection.

Also, you may be subject to Administrative Wage Garnishment, whereby the Department will require your employer to forward 15% of your disposable pay toward repayment of your loan.

Federal employees face the possibility of having 15% of their disposable pay offset by the Department toward repayment of their loan through the Federal Employee Salary Offset Program.

The Department may take legal action to force you to repay the loan.

Finally, credit bureaus may be notified, and your credit rating will suffer.
Once a loan is declared in default, you are no longer entitled to any deferments or forbearances. In addition, you may not receive any additional Title IV federal student aid if you are in default on any Title IV student loan until you have made payments of an approved amount for at least six consecutive months. Please see Going Back to School for more information on this topic.

To remove your loan from default, please visit the Repaying section of our site for a complete list of repayment options to assist you.

I have a student loan in default. In addition to wage garnishment, can the department of education go after my bank account or my certificate of deposit?

Yes, I believe they can. They can also take your federal tax refund.

And social security income, too.

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I posted this earlier in another thread....I hope it helps you.....Good Luck!!!

I was in the process of consolidating my loans, and, was foolishly under the impression that they would base your loan payments according to your adjusted gross income. This is not true....beware....if you are in default and consolidate with them....your payments will be figured on your entire gross yearly income with no consideration whatsoever for any other payments you have....including your home, car, medical, utilities, groceries or anything.

I was led to believe that they would base the payments on what we could afford after our normal living expenses....this is not true....after several phone calls to them....I got the real truth....they do not consider any of your living expensives.....strictly gross income!!

And yes they can garnish wages, tax returns, and also your bank accounts. Pnce again I hope this works out for you and can help in some way.

I myself decided to contact The National Consumer Advocate and locate an attorney. I have listed the link below.

I believe you will also find a link there to help them in lobbying congress fighting the unfair and unjust practices that are currently taking place concerning Student Loan issues!!!


http://www.consumeradvocates.org/

There is a list there for Attorneys listed in each state that are advocates and have experience in fighting unfair, ridiculous and impossible Student loan payback practices!!!

Can the Dept of Ed take your social security back pay for student loans in addition to garnishing?

Just my opinion, but I think they'd garnish the past month payments at the same rate as present/future monthly benefits. I doubt they'd yoink the whole thing.

The amount they garnish is something like 15% to 25%.

That is 15-25% of disposable income AFTER taxes.

They garnish at 15% of disposable pay after involuntary deductions.

I was recently garnished for defaulted private school loans. What they did is allowed me minimum wage x 30 hours + $2.50 per child under the age of 18 per week. Then they subtracted that from my actual income (gross) and whatever was left over they got 25% of. My boss actually ended up paying them a lot more than that out of my check but it got paid off sooner. I am still trying to recover from the months of small (very small) checks. Definitely my other bills suffered. I actually expect the second part of that same loan (that they haven't collected on yet) to be garnished at anytime. They didn't touch my bank accounts.

I'm expecting to be on full disability within a few months and I have an outstanding student loan in the 18k range. Can they take my back pay from the disability, bank account or garnish my SS check each month?

Yes...if this is a federal loan, any government payment is garnishable. If a private loan no.

can they garnish your husbands wages if you are married? I am only working partime and told them I am a stay at home mom with 2 kids. I incurred my student loans before I was married.

so it's true that they can take your social security or your income tax check. well if it is i don't think that's fair.

I'm normally on the other side of this sort of thing, but I don't see what's so honkin' unfair about it. Student loans have about the most liberal range of options of any common debt type. Try asking your PDL or credit card bank for a forbearance because money's tight right then.

I am 74 days delinquent right now. I called Sallie Mae today and they told me they start the default process at 180 days. My payments are over $300 a month. I cannot afford this.I can't even express to you how much I can't afford this. I only have two months of forbearance time left. They say they can't lower my payments anymore. They offered me consolidation but then turned around and told me I need a cosigner which of course I don't have. I have written to the PA Attornery General's Office who did look into it but told me there wasn't anything they could do. I am advising that if you live in PA that you try this. Maybe if they get enough complaints they will do something. I don't know what I will do once the start docking my paychecks. I owe about 25k.

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can they garnish your check in tx

Federal loans can use administrative wage garnishments in all 50 states.

my one student loan is in default...i was wondering if you get sued for non payment what can they take if you dont own anything? i understand they can garnish your wages and make you pay court costs but do they put you in jail if you cant pay

No,they can't put you in jail. They can take your tax refunds and garnish your wages, though.

Here is an interesting report put out by the National Consumer Law Center called Too Small To Help: The Plight of Financially Distressed Private Student Loan Borrowers. In it, they call for re-regulation of the industry, forcing private student loan lenders to work with you. They are also calling for the repeal of the 2005 adjustments to the Bankruptcy Code (apparently you used to be able to discharge private loans in BK). Anyway, Sallie Mae responded to their query on what a borrower could do to ease their situation. That answer is on page 9. Have you tried any of these methods?

can private student loans like sally mae take your tax refunds and garnish your wages...i am keeping up with my federal loans but dont have enough to keep up with sally mae

Yes they can. And do. But you would have to default and they would have to sue you. See page 9 of the above linked report about Sallie Mae. Your default info is on your loan contract, it could be as fast as one missed payment!

Private student loans have no ability to garnish income tax returns,

But they can garnish your wages right?

They can only garnish after taking you to court to sue you. Then they can garnish up to your state max.

If i co-signed for my exhusband on a student loan and he was given the bill to pay in our divorce, if he is only paying the collector whatever he can every month because he pays too much in child support for them to take out any money out of his payroll check will they do anything to me. He says as long as he sends them something there is nothing that they can do. Is that true?

Wrong. If the loan is in default or goes into default, regardless of payments being made, they will file suit against both of you. Your divorce agreement means nothing.

anyone know what i can do if im a cosigner on an ex's student loan and she has no job,and it has defaulted. i pay her childsupport..will i still have to pay since i have an income?

Cosignors have the same responsiblity as the borrower for payment. Be aware that since it has defaulted, they will end up sueing both of you.

Need help with defaulted loan situation, not sure how to use this fantastic website. please advise

I am currently on full SS disability and was using it to pay my living expenses while I took out $30,000 in student loans over a 6 year period to pursue an education to become a rehabilitation therapist (OT). My injuries included head injury that did not allow me to pass critical courses in my study program and I was dismissed from school for academic failure. NOW I am faced with no OT profession, a large student loan debt to start paying off in 6 months, and Social Security soon to stop giving me disability in a few months. I think I am in huge trouble. Is there any advice on what I should do? I hope I can even afford to have a roof over my head and be able to eat while doing some minimum wage job!

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No matter how you'd look at it, Student Loans are evil! Because of irresponsible and greedy government and private sector, soon, we're going to have to face another economic meltdown, but this time it will be much, much bigger.

Federal loans are NOT evil. There are more payment options than ever before. How many forms of credit can you get a payment plan of zero (if the income is low enough) and still be considered in current standing. Federal loans only require a little time and money management.....if you default you can still consolidate. You just cannot bury your head in the sand. The default rate has actually gone down, not up.

i would like to take advantage of the loan payment of ZERO. Where can I do this. My loan is with the unevil Sallie Mae and they have collected from their own sister company and then sent to collections but still want a balance of TWICE the payout balance.:rolleyes:

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