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I'm interested in horror stories of dealing with your student loans. I've never yet found one to beat mine:

I borrowed a total of $13,000 GSL and $3,400 NDSL for undergrad and grad school. After finishing graduate school, after having paid $1,000 on the NDSL and $2,400 on the GSL (net--during the three years I was out of school), I was forced into bankruptcy. I had been in unemployment deferment for about six months. In theory, my student loans were also deferred while I was in school.

Sallie Mae refused to allow me to reduce my monthly payments (I was out of work -- NO INCOME), so I included them in the bankruptcy. My hearing was held, and the person in charge (not the judge, who doesn't show up at these hearings) told me that my student loans were discharged.

Eventually, I got a job. At this point, the collection agency handling my loans for the Department of Education (ED) told me my GSLs had been discharged but not my NDSL. I disputed this, and they took my $3400 tax refund one year and $1800 the next. Finally, I told them that I was willing to just pay off the rest of my NDSL, on the condition I got a letter from ED agreeing that my GSLs were paid. They sent me that letter (the actual wording was, "Your final payment has been credited to your 3 GSLs"--and it included the loan numbers--"but your NDSL still needs to be paid." I paid it off at once.

About a year later, I got a call from a collection agency, telling me they were holding my $19,000 of student loans. I pointed out they were paid, they accepted this (it was in my computer record) and sent the loans back to ED. This happened with two more collection agencies. Then another collection agency tried to garnish my wages -- and they had authority to garnish 60% of my income! I fought this, and wrote to ED.

ED replied to me that I owed these loans, gave a totally incorrect provenence for them, and said that due to penalties and interest I now owed $29,000. (Remember, there was ~$10,400 remaining to be paid on the loans last I had heard.) They then gave me a choice: have my wages attached to the amount of $960/month (my pretax income was $1750/month, and I could barely make it on that) or do a consolidation.

Needless to say, I consolidated. I've been trying now for three years to get them to lower the total amount; imagine if my business gave someone a document saying they had paid what they owed me, then later arbitrarily tripled the amount by adding fees and interest! I have no problem paying the $10,400 I should owe, if they can show me the loans I am paying on are mine. For the record, I attended MIT from 1977-1981, then went to grad school at USC starting in 1981. I took out three GSLs during this period, and have the promissory notes to prove it. ED claims I am paying on two loans to attend USC for 1979-80 and 1980-81. When I ask for proof, they send me my three promissory notes from attending MIT.

Of course, there's the legal track -- I contacted a lawyer who specialized in these types of case. After all, one of the letters I got from Diane Spadoni, Regional Director of ED, told me that if I felt any of my "Constitutional rights had been violated" I was "welcome to pursue your claim in a court of law." I found out, however, that ED routinely declines to be sued -- I would need a Federal court to rule that they had to be sued, and my lawyer tells me that would cost about $30,000, so I'm back to square one.
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