This Could Make the Guinness Book Of World Records…
Posted on | February 16, 2010 | No Comments
As the largest student loan balance ever: $550,000. The Wall Street Journal has found a borrower with this incredible level of debt:
Columbus, Ohio, finished medical school in 2003, her student-loan debt
amounted to roughly $250,000. Since then, it has ballooned to $555,000.
It is the result of her deferring loan payments while she completed
her residency, default charges and relentlessly compounding interest
rates. Among the charges: a single $53,870 fee for when her loan was
turned over to a collection agency.
"Maybe half of it was my fault because I didn't look at the fine print," Dr. Bisutti says. "But this is just outrageous now."
This debt collection tactic could make for awkward "across the fence" neighborly conversations:
Sallie Mae, meanwhile, called Mr. Bisutti's neighbor. The neighbor
told Mr. Bisutti about the call. "Now they know [my dad's] daughter the
doctor defaulted on her loans," Dr. Bisutti says.
Ms. Holler, the Sallie Mae spokeswoman, says that the company may
contact a neighbor to verify an individual's address. But in those
cases, she says, the details of the debt obligation aren't discussed.
Details may not be disclosed, but it wouldn't take a rocket scientist to figure out that when Sallie Mae is calling about a neighbor, they might want this information to collect on a debt. I am assuming that there are credit collection regs. that require for them to say who they are and the purpose of their call.
The other interesting statistic in the story was that only 40% of loans are currently in active repayment:
"There is an estimated $730 billion in outstanding federal and private
student-loan debt, says Mark Kantrowitz of FinAid.org, a Web site that
tracks financial-aid issues—and only 40% of that debt is actively being
repaid. The rest is in default, or in deferment, which means that
payments and interest are halted, or in "forbearance," which means
payments are halted while interest accrues."
I think it is about time that FFEL lenders and the Dept. of Education release figures on borrowers they are signing up for income-based repayment. It certainly made for a good press release in July of last year…it would be nice to know that it is actually providing relief to borrowers. Better yet, require every lender and the Dept. to provide a weekly update on the number of approved IBR borrowers.
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