It turns out "paid in full" in student loan speak only refers to principle balance. It seems student loan organizations routinely issue letters to borrowers stating their loans are paid in full, say, after consolidation. Then, the guarantor promptly assesses a collection fee without attempting to bill the borrower and reports the outstanding past due balance to the credit bureaus sometimes waiting 2 or 3 years first. Can you believe that? I verified this with AFSA and another loan servicer.
