Thank you for responding to my post. In answer to your questions:
1. The lender was not adjusting the interest rate annually on the Stafford loan. This was also a subsidized Stafford loan and the lender appeared to be capitalizing interest while I was attending school full time. The lender was charging the maximum interest rate allowed on two of the loans and they were actually exceeding the maximum on the others. For two years the interest charged was more than double the official variable rate.

2.I brought the interest issue up to the lender several times but they were unresponsive. The lender is a Federal Credit Union and I made a written complaint to the National Credit Union Administration. The NCUA agreed that the interest charges were wrong and the lender removed about $3,500 worth of finance charges from the accounts.

Since you are interested and expressed concerns about further lender actions against me I would like to give a more detailed account of my history with the lender. I don't know what facts are pertinent so I will tell you everything I can. It’s a bit long.

The loans in question were disbursed for the 94-95 and 95-96 school years. Each semester disbursement was made into a separate account.

I was on in-school deferments until May of 2001 when I graduated. The lender was removed from the FFELP around December 2000.

I should have entered repayment immediately after graduation since the grace period had been used up previously. There were three periods when I should have been on an in-school deferment after graduation.

I never made any payments on the loans at all until April of 2004. The lender was getting very aggressive with their collection efforts and was calling me more than once a day and they were contacting every member of my family that had accounts there.

I approached the Lender in April of 2004 to make payment arrangements. The loan officer told me that a $70 monthly payment would be acceptable until I was able to pay more. I made the first payment that same day and agreed to continue monthly. My statements were showing an 8.25% rate on two accounts and an 8.92% rate on the other two. I first expressed my concerns about the interest at this time.

I made the next monthly payment and deposited the money for the June payment at in early May. At the end of May the lender closed my checking account and removed all money from the account and applied it to the loan balances. I was not told about this until I called them about a credit card payment that was returned NSF.

I met with the loan officer again at the beginning of June. I was told that the $70 payment was not covering all of the interest being charged monthly and that Colorado state law allowed the lender to seize my assets. I again mentioned my concerns about the interest rates and stated that I thought the total finance charges shown on the accounts were incorrect. We agreed at this point that the funds I deposited for the June payment were those that were taken from the checking account, and I would not need to make further payment that month.

A few days after that meeting(June 8, 2004) the lender charged off all the loans. I did not know that this happened until July 14, 2004 when I received my June account statement. I had actually gone there early in July to make a payment and was not told at that time about the charge offs.

I met the Loan Officer again the day after receiving the June statement. I was told by the loan officer that the charge offs were "internal" and would not be reported to the credit bureaus as long as I continued making the $70.00 monthly payment(*this was oral at this point but I have it documented*). I brought up the matter of the interest again and had documentation that the rate should be half of what was being charged. I was told that no interest was being charged now that the loans were charged off. I expressed my concerns about the finance charges that were already applied to the account balances. I requested copies of the promissory notes and an itemized statement showing how the finance charges were applied to the accounts on a monthly basis. He told me that they did not have copies of the Prom notes and they could not supply a record of the finance charges since they had a new computer system installed that months. He did give me a photo copy of all the papers in their folder. This included some information about the lender being removed from the FFELP.

After this meeting I tried to get the Department of ED involved in the matter. They told me that the loans were no longer student loans and that they were now bank notes.

At this point I wrote a certified letter to the lender requesting copies of the prom notes; a monthly account history; and details of all periods of forbearance, deferment, and repayment. After this letter went unanswered for seven weeks I wrote a second letter which directly challenged the existing finance charges on the accounts and I gave the exact interest rates that should have been charged on the loans during periods of repayment.

I finally received a response to these letters on Nov. 9, 2004. This letter included copies of the Promissory Notes, but did not include a history of the accounts. The letter stated that further research would be done on the finance charges, but no account history would be available.

I waited until the beginning of 2005 for the additional information to be sent. I attempted to contact the Department of Ed Ombudsman during this time and was turned away. I wrote a letter explaining the situation to the NCUA on Jan. 10, 2005. The NCUA forwarded the letter to the Credit Union's Supervisory Board.

The credit union manager responded to this letter on February 10, 2005 with a letter contending that the fixed interest rates were correct. Documents actually showing the variable nature of the interest rates were included with the letter. No account history was included with this response. It’s also interesting that the lender actually charged me a fee for the postage on this letter (without telling me or giving a receipt for the charge).

I called the NCUA several times after this, and I was finally told to send an additional letter stating that the lender's response was not sufficient. On March 18, 2004, I received a courtesy copy of a letter from the Credit Union to the NCUA with complete copies of the front and back of the Prom Notes.

I received a decision from the NCUA on April 25, 2005 that there were discrepancies with the way interest charges were calculated. Their decision was that the credit union must supply an itemized statement and adjust the finance charges that were applied to the accounts. The decision stated that the response from the credit union should be made "shortly" but it was left open ended.

I made my requests for my annual credit reports at about this time. I found out that contrary to my payment agreement with the lender, the charge offs had been reported to Equifax in September of 2004.

I met with the Credit Union manager to check on the status of their response and inquire about the credit reports. I was told that they needed more time to calculate the interest charge adjustment. At this time they brought up the subject of settling the charge off. The Manager also stated that I was "not legally obligated" to pay the loans. The manager told me that the credit report issue could be resolved by disputing the negative information with Equifax

I did dispute the Equifax report and the charge offs were removed from the report very quickly.

While paying my monthly payment on June 27, 2005 the manager took me aside and told me that they had the finance charge adjustment ready. I received a written copy a few days later. It shows that about $3,500 worth of finance charges were removed from the accounts. I did not actually get the monthly history of finance charges that I had requested, but I did not want to pursue the matter any further.

I found it very odd that the Credit Union Manager had told me that I wasn't obligated to pay the loans. I never actually believed her and figured that she was trying to dupe me somehow. I was very upset when I found out about the Equifax report. The agreement not to report the charge offs was mentioned in two different letters from them that were written after they had reported.

At this point it appears that I’m not paying interest on the debt and the delinquency isn’t being reported to the credit agencies. I’m happy enough to continue that arrangement. I am really sick of dealing with it. I wish I could get free credit reports more than once a year, just to check up on it.

I hope that this is of some help to you. If you have any more questions, feel free to ask. I wish you luck with your efforts.