Hey Doris

Discussion in 'Credit Talk' started by steve, Aug 5, 2000.

  1. steve

    steve Well-Known Member

    OK. I finally figured out the riddle. I just couldn't understand why my loan guarantor wanted a 33% commission on top of the 25% commission they had already received on my defaulted loans. Now I know. Apparently, Northwest Education Loan Association thinks their "pre-claims assistance" counted as the "1st collection" with a 25% collection fee attached. Then, when the loan actually defaulted, a "second collection" was performed by a 3rd party servicer attaching a 33% collection fee. Also, it seems guarantors regularly wait until after a loan is consolidated to assess their fees. So, as student loan organizations reason "paid in full" only refers to principle balance, they report a borrower as having a zero balance, but 120 days past due. The past due is, of course, referring to unpaid collection fees which sometimes weren't assessed till years after the consolidation. Now, you mentioned Sallie Mae was assessing a collection fee prior to assignment. I suppose Sallie Mae might think they could get the collection fee if they could declare a loan in default, but get it reconsolidated before the guarantor pays out on a claim. In that event, the guarantor might charge their collection fee for pre-claims assistance anyway. So, necessarily, every default will have two collection fees assessed since pre-claims assistance is always performed. Does this sound right? Let me know.
  2. Doris K.

    Doris K. Well-Known Member

    From what I recall, the loan amount was soubled before it reached the guarantor. After that, the guarantor added a hefty chunk. I'm not sure how much, but the borrower was stuck with much more than he/she actually borrowed. I don't remember exact details of the costs associated.

    I do remember that in all the cases I heard about, these people were not given the grace periods or the deferments they were entitled to but were defaulted. They felt Sallie Mae was just out to make a pile of money.

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