Paying and Paying over and over again
I borrowed $6,000 in 1988...over the years paid back $9200...have had my tax refund taken for tweleve years...now they are demanding over $14,000 more. That's over $23,000 for a $6,000 loan!
I've written letters, sent copies of my cancelled checks, hired lawyers and yada, yada, yada..I still get calls several times a month from debt collectors demanding payment.
I've been told they would take my house and my family would be homeless. I've been told they would take my car when it was paid off. I've been told I committed a federal offense and I'd go to jail and my daughter would become a ward of the State. I've been told my bank account would be ceased. I've been threatened they would come to my house to "get me." I've been told they would see to it I never got a job. I've been told that IRS Tax Offsets only apply to penalty charges and not interest or principal. After 15 years and over one dozen different "loan servicing companies" I've heard it ALL!
So far none of that has happened, but I fear with the current trends in our government my time is running out. Luckily, I'm self-employed so garnishment hasn't been an issue, and I've never been denied a loan because of this. In fact, loan officers shrugged it off saying, "everyone has those on their credit reports...we don't even pay attention to student loans anymore."
I'm so tired of the harrassment I was considering contacting the ombudsman and sending my proof of payments when I found this site. From the comments concerning the ombudsman - now I'm not so sure if it's worth the aggravation. Anybody have a positive experience here?
Thanks to the cybergods for this site. It's both comforting and disturbing that I'm not alone on this.
Math
You failed to state the loan type, when it entered repayment, when it 1st defaulted, when you started making payments, etc.
Let's assume it was a SLS loan at 8% interest (a VERY good rate for 1988).
The table below shows interest accruel for 6 yrs, and assumes you defaulted on the 7th year.
We assume no payments, and that interest was only capitalized once a year (in your dreams!)
8,000.00 + 480.00 (1.31 a day in int acc 1st yr)
8,480.00 + 678.40 (1.86 a day in int acc 2nd yr)
9,158.40 + 732.64 (2.00 a day in int acc 3rd yr)
9,891.04 + 791.28 (2.17 a day in int acc 4th yr)
10,628.32 + 854.59 (2.34 a day in int acc 5th yr)
11,482.59 + 918.61 (2.25 a day in int acc 6th yr)
And now you default (APR switched to legal limit of 18.5%, no additional penalties or fines) :
12,401.20 + 2,294.22 (6.28 daily int acc 7th yr, MONTHLY PAYMENTS of 190.34 will only satisfy interest)
make no payments and cap:
14,695.42 + 2,718.65 (7.44 daily int acc 8th yr, MONTHLY PAYMENTS of 226.25 will only satisfy interest)
As you can see, by the 2nd year of default, the total amount you owe has doubled. Your dribbling, grudging, involuntary payments totaling 9,200 from 1988 to 2006 are only a fraction of what you owe...the total amount you have to repay will increase more and more the longer the loan remains in repayment.
Math
Only a loan shark could explain it better.