Question about student lou-ans
 

My girl is getting her tax refund intercepted because she defaulted on her student loans from 3 years ago. I get that, she should have paid it. But the letter she received lists what she owes as follows:

Principal: $6954.39

Interest: $957.52

Penalty: $0

Fees and Cost: $1925.76

Total: $9837.67

I understand the interest, but how do they come up with the "fees and cost" @ almost 2 G's? It doesn't say what they're for. She's tried calling them twice to get a detailed assessment of how they came up with that number but they still haven't sent anything after three weeks. Something else strange is where it is supposed to show her account number is blank. Does this sound fishy to anyone else or is this completely normal?

If it makes a difference her lender is "Direct Loans" through the US Department of Education.

Sounds like she's screwed.

The type of loan would be useful in determine a proper response.

Is it covering everything that she owes?

All you have to do is either call the IRS or Direct Loans and see if it's been paid off. They aren't going to tell you what the "fees" are for. Consider it a lesson learned and move on.

^3 posts all at the same time, that's funny. I have never had issues with Direct Loans. My wife has a loan that we owe ~9k on, and I have never had an issue with her account number not being on it. Then again, we are paid ahead like 3 years (we are just trying to get it done as quickly as possible).

I don't know what the default fees are for direct government loans, but I know my private loans have a default fee of 50% of the balance at the time of default.

She might be able to speak to the lender and get the fee reduced if she agrees to a payment plan and sticks with it.

No her tax return is only enough to cover about half of it. So they can just come up with any amount they want, call it "fees", and you have to pay it? Sounds like a scam to me. How can anyone charge you almost $2000 in "fees" and not have to tell you what they're for?

She defaulted. They could put that $2000 into "penalties" and you wouldn't be able to say shit.

I'm guessing the fees are for having to track down their money.

Stafford loans all have a fee assessed on them. For loans prior to 2007 this was 3%.

Since she didn't bother paying back her loan and is now in default, it all becomes payable immediately including interest, late fees, penalties, and whatever fees they want to assess related to the collections process, if it's gone to collections.

She could have 15% of her wages garnished or other legal issues if the process drags on long enough.

There's no reason to default on them because you can call up the servicer and ask for a forebearance or a deferment anytime you want to, and even if you cocked that up, you can call and ask about loan rehabilitation where you agree to a repayment plan and they bring you out of default.

Crazy. Ive never missed or even been late on a loan or any other bill in my life so this is all new to me.

Student loans are the absolute worst loan to default on. The government will take all necessary steps to get their money back....and they WILL NOT go away.

She's ****ed. If you default on a student loan, you're pretty much going to pay whatever they are asking you to. It's not the sort of debt that goes away or she's going to be able to "fight" in any capacity.

Listen to Pest, he knows what's up.

Maybe... defaulting on a credit card debt might be worse, because they'll sell it to a scum sucking vermin debt buyer who will harass and sue you.