I am a single, disabled mother who returned to school several years ago to better support my children. I had a total of 3 student loans for approximately $5,000 made through Citibank. When I graduated, Citibank sent me a single statement with a total of $105 per month due on all 3 disbursements, requesting a single monthly payment. I began paying between $140 and $200 per month. Citibank applied all this to a single loan payment, and caused 2 disbursements to go into default. I was forced to consolidate at a penalty of 25% due to their bookkeeping error. Unfortunately, they only consolidated 2 loans; I began paying the consolidated loan not realizing they had forced the original good loan into default through this.
Over the years, this has compounded to a total debt of $20,000, even though I began paying the loans right out of college. Last year, my total tax refund of $5,870 was kept as an offset, and my refund is scheduled to be kept this year even though I have now made 9 monthly payments and this loan is rehabilitated. Because DCS refuses to update my credit report, I am unable to obtain an FHA mortgage to replace my home, which burned down, causing me to lose everything I owned. I had asked for a forbearance/deferral when I was unemployed for 18 months, which was granted but was not reflected in how my loan was handled.
Sallie Mae worked with me and forgave two of the loans; I have a letter stating this, but DCS which is the collection agency, refuses to accept it. My current balance is still almost $7,000, with another $1,000 in penalties payable to DCS.
If a private company did this it would be considered usury; but because it is the federal government, it is allowed.
My credit report is ruined because of their errors. At one point I had over 20 loans with a balance of $50K due to these 3 small student loans. I am making regular payments; however, the practice is not to update the credit bureaus at all until a year has gone by. This is ridiculous as I am making regular monthly payments, over what was agreed to, in advance of the due date each month. DCS reports that I have not made a payment in over 5 years which is totally incorrect, and of course lenders look at this as though I am a deadbeat. By the time I am done, with interest and penalties, I will have paid $25,000 on $5,000 in student loans. They still threaten regularly to garnish my wages, even though I am paying under the rehab agreement.
The government refuses to do anything, as they say I have to work with the lender. Unfortunately, the lender is their assigned collection agency, and they are raking in the dough.
I wish this was a solitary story but I know way too many people in similar plights.
Upper Darby, Pennsylvania