Student Loan Interest in Class Action

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Latest post Fri, Feb 17 2006 12:55 PM by JohnFig. 3 replies.
  • Tue, Jan 24 2006 12:29 PM

    Question [=?] Student Loan Interest in Class Action

    I'd like to know if there are any pending class action lawsuits against Sallie Mae (SLM Corp.) and their cronies USA Funds etc.

    I am aware of only one - by the law firm of Lieff-Cabraser (California) which reportedly is considering a lawsuit based on "issues concerning interest calculations".
    (imagine that !)
    Since I live in Connecticut, I do not beleive I can jump on that band wagon - does anybody know of any similar type suits in Connecticut ?

    My story follows.

    December, 2005

    I have been unable to reconcile my student loan debt. Graduating in 1995 with $37,625 in student loans, I have to date paid over $48,500 on those loans yet Sallie Mae claims I still owe $32,250. I can show that I have paid (thus far) over $43,125 in interest and penalties alone, over an eleven year period this works out to over $4000.00 / year!
    Unbelievable. To clarify numerically the above comments;

    Original Loan 37,625
    Paid 48,500
    Owing 32,250
    Total Paid + Owing 80,750

    80,750 – 37,625 = Total Interest and Penalties Paid of over $43,125

    The worst part is that there seems to be no end in sight, I didn’t consolidate a couple years ago when the rates were low because I couldn’t (wouldn’t) accept what they were telling me I owed.
    Having graduated with a series of loans I found it impossible to reconcile the amounts owing over the years, Sallie Mae is apparently not required to send payment histories and my loans were often transferred between lenders which exasperated the task of tracking payment histories, balances due etc. It was only after I escalated the issue to the Department of Educations Ombudsman last year that I was finally able to obtain a declining balance spreadsheet from Sallie Mae, of course now I have ten years of fluctuating interest rates and payments histories to pour through to understand where all my money has gone. I’ve had to hire a CPA to help me and even he can’t believe what he is seeing.

    Admittedly I was slow off the start in making regular payments having fallen short in the first 3 or 4 years after the loans came due. I attribute this to the fact that I didn’t even know who I was supposed to be paying half the time, I’ve made payments to the Education Loans Servicing Center, U.S.A Group Loan Services, NelNet, Sallie Mae United Student Aid Funds and other collection agencies, at one point a few years ago I had payment booklets from at least three of these organizations at the same time !

    Some (but not all) of my loans defaulted in 1998. That’s when this Debt Collection Services (DCS) company got involved, my wages were garnished, a payment plan had to be set up to get out of that, needless to say my credit was (and still is) ruined.
    The records I was finally able to obtain from Sallie Mae this past year show that I did indeed pay DCS nearly $17,000 as shown below, but my original loan amount was apparently only reduced by about $3,000, so basically I paid DCS over $14,000 in collection costs, fees etc. I have yet to determine the legality of those transactions.

    The spreadsheets below show what I’ve paid thus far, clearly not an issue of failure to pay, my case shows just how ruthless these companies can be, somebody is getting filthy rich while I struggle to support my kids.
    SM Summary pg 2 of 2 December , 2005 Company Total Paid

    USA Group $7,478.22
    ELSC $2,038.06
    Sallie Mae $22,148.87
    DCS $16,830.53

    Yearly Totals All Organizations
    1995 $495.03
    1996 $1,543.03
    1997 $5,343.02
    1998 $0.00
    1999 $5,143.27
    2000 $5,430.76
    2001 $6,166.70
    2002 $6,925.00
    2003 $6,968.73
    2004 $4,892.82
    2005 $5,587.32
    Total Paid on 37.6 K debt $48,495.68

    Avg Yearly Pmts $4,408.70
    Avg Yearly Pmts 1995 - 2000 $2,992.52
    Avg Yearly Pmts last five years $6,108.11

    As I stated previously, tracking the amounts owing has been nearly impossible. How can a lending institution the size of Sallie Mae get away with not sending regular payment histories ? This is one of the reasons I was never able to reconcile what was owed, had I seen the balance increasing the way it obviously was I would have done something much sooner. If you financed a lawn mower at Sears and then a couple months later financed a weed-wacker, you could safely assume that Sears could tell you how much you paid on each of those items against the principal, interest etc. even three or four years down the road. Not so with Sallie Mae, if they were handling the loans on the lawn appliances we would get something like this “portions of your loan for the lawn mower were transferred to J.C. Penney for collection, Sallie Mae cannot provide payment histories because they no longer own that loan, your other loans for the lawn mower engine, tires etc. have been transferred to Walmart for collection and finally the loan for the weed-wacker is in default and has been sent to a collection agency”. Meanwhile you’re left standing there with payment booklets from Sears, Walmart and J.C. Penney and a letter from a collection agency indicating they’re charging you 25% of the loan amount in penalties !

    I have spoke to a number of individuals who have had similar experiences with Sallie Mae. The press has given a lot of attention to banks issuing credit cards to college students at a very low rate and then tripling or quadrupling those rates after a missed payment or two, that issue pales in comparison to what Sallie Mae is getting away with on student loan debt repayment.

    Based on the numerous articles I’ve read recently, it appears to me that this behemoth lender is accountable to no one, some type of legislation must be enacted to hold these loan sharks at bay. Right, I’m sure the government officials who receive millions from these companies will jump right on it.

    What would happen if I just stopped paying ? Immigrated to Canada and never came back ? Well it appears they would garnish my Social Security checks, I’m 47 now, if I stopped paying the loans today, in another twenty years the amount owing would be well over $125,000, if I get $100.00 / month in Social Security….. Bon…

  • Thu, Feb 16 2006 1:54 PM In reply to

    • cubba
    • Not Ranked
    • Joined on Wed, Feb 15 2006
    • Posts 8

    re: Student Loan Interest in Class Action

    I feel you man. Sallie Mae is also at the center of my issues (see: Extreme Student Loan Debt under bankruptcy/debtor). I'm in the process of putting together a class action case against them. Let me know what you think.
  • Fri, Feb 17 2006 12:55 PM In reply to

    • JohnFig
    • Not Ranked
    • Joined on Fri, Feb 17 2006
    • Posts 1

    re: Student Loan Interest in Class Action

    Hey I was wondering what type of class action suit were you getting ready to file against Sallie Mae. I also have a problem with them however it is not the typical interest rate concerns or biling concern. I thas to do with the fact that they back schools which they have not investigated to make sure that they are qualified to even teach and engage in businness alliances with them. The end result is that the school gets prospective students to borrow loans with Sallie Mae ( which is what Sallie Mae wants), gets them to sign the promissory note and everything and leaves the student hanging with either a crappy learning facility and structure or one with nothing at all. The student gets nothing from the school yet the schools and sallie mae get paid.

    This is exactly what happened with me and the Art Institute of NY. The school was still under contruction my first day of class. In one class, the next room over, the workers were cutting aluminum. We had no equipment to properly learn and were told that if we needed equipment we should either buy it or borrow it from a student from another school. The school eventually bought equipment but it was not to the level they promised and one could not utilize the equipment b/c of stringent borrowing times.

    I got nothing from the school and eventually left b/c it was more than apparent that it was not what it had stated it was.

    Sallie Mae takes no responsibilty and have actually told me that they it's not their problem whether I enjoyed the school or not. That's not the point. I did not have a school that was properly set up to teach and they are not even licsensed from the state b/c their are considered proprietary schools.

    So they partner up with these schools, and through the schools they get victims and there is nothing that one can do. I have them saying they are going to garnish my pay and I am losing my federal aid for the community college I am going to because of this.

    I wanted to know whether my situation with them qualified me to possibly get in on the class action suit. If you go to ripp off you can find many students who have been cornered into the same sort of deal. I can also over you a sixty minutes episode regarding students in NYC that were caught in the same trap. Let me know if we can talk.

  • Fri, Mar 3 2006 4:36 PM In reply to

    • Chris4
    • Not Ranked
    • Joined on Fri, Mar 3 2006
    • Posts 1

    re: Student Loan Interest in Class Action

    Interesting, I too received only a small loan 12k, since then I have paid nearly two years worth and have only made a very tiny dent in the loan. I would also question whether or not they are calculating their interest correctly?
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