collection company has added to principal amount on student loan

by KR
(Portland, OR, USA)

I am ashamed to say that I have an outstanding student loan from the 80's. My federal tax refunds have gone toward paying this debt over the years, but the principal on this loan has gone from $700 in 2000 to $3450 as of last year. The debt has been transferred to several collectors over the years, but it seems they have added penalties and interest to the principal. I broached the subject with the last collector I talked to and he ignored it. I asked him for the records of how the principal had been added and nothing came of it. Can they do that?

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Aug 31, 2010
student loan collection problems
by: Gerri & Mary

Student loans carry few of the standard consumer protections we have come to expect of other types of loans. In his book, The Student Loan Scam, Allan Michael Collinge, does an excellent job of exposing why this is and the effect it's had on millions of student loan borrowers.

We don't have an easy answer for you. Interest can quickly mushroom on defaulted student loans, making it even harder to dig out from under.

It is important for you to try to get your student loan out of default so you can return to reasonable interest rate and repayment schedule. But it's not at all easy.

We would suggest you read The Student Loan Scam, including the instructions near the end for dealing with defaulted student loans. The Department of Education also publishes some information on rehabilitating a student loan that may be helpful for you.

We're sorry you're going through this, and hope you're able to find some way to get back on track.

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