My husband and I consolidated all our Federal Student loans in May 2002. Six months following that consolidation, a company called American Education Services started sending letters stating that my husband had an "Alternative Loan" dating back to December of 1992. He asked for promissory notes, and they were sent. He did in fact have a loan with his father as a co-signer dating back to 1992. As far as he could remember, it had been years since he made any payments on this loan, and it could not be consolidated with the Federal loans, since it it is not a government backed loan. Before we knew it, AES, which was from Pennsylvania , sent a wage garnishment order for 10% of his wages to his company in Virginia. He wrote to them and told them he was given no notice of this garnishment, and that it was causing a financial hardship for our family. No response from AES. I know they are at least supposed to give him notice of a garnishment, but can AES, who did not hold a Federal loan, send a garnishment order out of state without taking him to court?
An alternative loan is a private loan.... so, my husband took a private student loan 12 years ago in PA, and now his company in VA can be given a piece of paper that directs them to garnish his pay. He has since moved on from that company, and it is no longer being garnished, but it was my understanding that collection on private or state student loans had to be done through a lawsuit.
In the case of a private loan that is correct. Student loans are a whole different ball game. What does his original contract stipulate concerning defaults?
All we have is a photocopy of an adjustable rate promissory installment note, we don't have the original. It just gives the standard, "if you don't pay, you will pay all late charges, plus reasonable attorney's fees". Looks like PHEAA had what was called a Higher Education Loan Plan, for students who couldn't get all their expenses covered through their Federal Loans, and that's who is trying to collect this loan.
