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Student loans and predatory lending (in TX)
Posted on 5/30/13 at 9:54 pm
Posted on 5/30/13 at 9:54 pm
I've seen a number of posts on here from time to time dealing with student loan debt and how you were able to fight the lender and pay off the debts early... so ANY advice on our situation here is much appreciated.
My SO has been battling hard to pay down her student loan debt the last 2-3 years, but keeps finding that no matter how much extra she prepays each month the principle never seems to go down by more than a fraction of what she paid. She makes good money, so I'm talking about $15-20k of payments applied to only $2-4k in principle... the rest of it we assume is applied to "prepay" the interest on the loan.
She has fought with the servicing company on the phone countless times on how to apply the payments but it never seems to do any good. The terms of the loan are absolute shite and seem to allow this type of shenanigans, at least in Texas. In other states the original lender was brought to court by the state, slapped with penalties and told to repay the amounts to debtors and eventually went bankrupt.
We are at our wits end trying to figure out our next step. Hire a lawyer? Contact a state rep or AG?
Edit: The above was riddled w/ spelling errors.
My SO has been battling hard to pay down her student loan debt the last 2-3 years, but keeps finding that no matter how much extra she prepays each month the principle never seems to go down by more than a fraction of what she paid. She makes good money, so I'm talking about $15-20k of payments applied to only $2-4k in principle... the rest of it we assume is applied to "prepay" the interest on the loan.
She has fought with the servicing company on the phone countless times on how to apply the payments but it never seems to do any good. The terms of the loan are absolute shite and seem to allow this type of shenanigans, at least in Texas. In other states the original lender was brought to court by the state, slapped with penalties and told to repay the amounts to debtors and eventually went bankrupt.
We are at our wits end trying to figure out our next step. Hire a lawyer? Contact a state rep or AG?
Edit: The above was riddled w/ spelling errors.
This post was edited on 5/30/13 at 11:43 pm
4
Posted on 5/30/13 at 9:55 pm to sneakytiger
Who is the lender?
Posted on 5/30/13 at 10:17 pm to Golfer
ACS is the current lender and servicer. I forget who the original lender was.
Posted on 5/30/13 at 10:41 pm to sneakytiger
ACS sucks. Luckily I only had $5000 through them
This post was edited on 5/30/13 at 10:42 pm
Posted on 5/30/13 at 10:43 pm to sneakytiger
quote:Panhandle Plains probably
I forget who the original lender was.
Posted on 5/30/13 at 11:08 pm to sneakytiger
quote:
I'm talking about $15-20k of payments applied to only $2-4k in principle
This sounds perfectly legit. It is very typical for the bulk of your payment in the early years to mostly go to interest. It takes awhile for that to go the other way around.
ETA: If it helps, the first 2-3% or so on a note is simply accounting for inflation.
This post was edited on 5/30/13 at 11:09 pm
Posted on 5/30/13 at 11:14 pm to foshizzle
Let me clarify... the majority of that $15-20k is prepayment. Way over the standard payment due.
Posted on 5/30/13 at 11:18 pm to sneakytiger
Did she ever defer them?
Posted on 5/30/13 at 11:19 pm to LSUSUPERSTAR
If you mean forbearance, then no
Basically any amount she's ever paid in excess of the scheduled payment is applied to nothing... i.e. "future interest" and the principle stays virtually the same. It goes completely against basic concepts of debt and interest.
Basically any amount she's ever paid in excess of the scheduled payment is applied to nothing... i.e. "future interest" and the principle stays virtually the same. It goes completely against basic concepts of debt and interest.
This post was edited on 5/30/13 at 11:26 pm
Posted on 5/30/13 at 11:29 pm to sneakytiger
quote:yeah that's fricked up
Basically any amount she's ever paid in excess of the scheduled payment is applied to nothing... i.e. "future interest" and the principle stays virtually the same. It goes completely against basic concepts of debt and interest.
Posted on 5/30/13 at 11:52 pm to sneakytiger
quote:
Basically any amount she's ever paid in excess of the scheduled payment is applied to nothing... i.e. "future interest" and the principle stays virtually the same. It goes completely against basic concepts of debt and interest.
So there is no reason to pay it off early? You have to pay the interest no matter what? That should be a crime!
--I never had to use student loans, thank God!
Posted on 5/31/13 at 12:16 am to sneakytiger
Posted on 5/31/13 at 7:36 am to sneakytiger
What am I missing here. How is this predatory lending??
I have a student loan with ACS and I can apply extra payments towards principal.
From their site:
You ever look at a home loan amortization schedule? By your standards any home loan is predatory lending. She probably has a 30 year term on her loan as well which isnt much different than a home loan.
I have a student loan with ACS and I can apply extra payments towards principal.
From their site:
quote:
Q: Prepayment
A: You may prepay your loan at any time. There is never a penalty for prepaying your loan or for paying it off early. Prepayment means that you have sent in a payment above and beyond the amount currently due. Any excess money you send in that is more than the amount of interest due will always be applied to your principal balance. In accordance with Federal Regulations, we will automatically advance your next payment due date by the number of full installments in excess of your regular payment. If you have remitted a payment that has advanced your next payment due date but would like to continue being billed, just include a note with your payment. Please be sure to reference your social security number on all correspondence.
You ever look at a home loan amortization schedule? By your standards any home loan is predatory lending. She probably has a 30 year term on her loan as well which isnt much different than a home loan.
This post was edited on 5/31/13 at 7:42 am
Posted on 5/31/13 at 7:39 am to Catman88
quote:
Any excess money you send in that is more than the amount of interest due will always be applied to your principal balance.
This sentence doesn't exactly say that they aren't counting your future interest before applying to the principal.
Posted on 5/31/13 at 7:45 am to LNCHBOX
Define future interest. You accrue interest daily. If you define it as the amount of interest that has accrued since your last payment then whats wrong with the practice? They owe interest. Their waterfall is to apply all payments to interest (or fees) first like most banks. If you then send in another payment then it goes to principal only. There is no interest that exists past the date of accrual.
Are you trying to say that the bank is applying the payment to interest that hasnt accrued yet because thats not true at all. I know that from paying to principal on my own loan. I think the OP just doesnt understand the amortization schedule of a loan.
Are you trying to say that the bank is applying the payment to interest that hasnt accrued yet because thats not true at all. I know that from paying to principal on my own loan. I think the OP just doesnt understand the amortization schedule of a loan.
This post was edited on 5/31/13 at 7:48 am
Posted on 5/31/13 at 8:15 am to Catman88
The OP's SO must have a substantial amount of student loans
Posted on 5/31/13 at 8:20 am to Catman88
quote:
Are you trying to say that the bank is applying the payment to interest that hasnt accrued yet because thats not true at all. I know that from paying to principal on my own loan. I think the OP just doesnt understand the amortization schedule of a loan.
I'm not sure what they are doing, but I know how to amortize a loan. When someone has made $15-20k of payments in excess of the scheduled payment, but the principal has only been reduced by a small fraction of that, something is wrong, no? ACS is constantly being sued for this type of shite - LINK
quote:
The OP's SO must have a substantial amount of student loans
Not really. She can have them paid in 2-3 years if we can figure out how to actually apply payments to principle.
This post was edited on 5/31/13 at 8:23 am
Posted on 5/31/13 at 8:23 am to sneakytiger
quote:All of that should go to principal IMO. I would be pissed. I've never had a problem with them doing this to me, but then again I only had $5000 through them. Panhandle Plains sold them one of my loans a few years ago.
$15-20k of payments in excess of the scheduled payment, but the principal has only been reduced by a small fraction of that
Posted on 5/31/13 at 8:26 am to ForeverLSU02
Ironic that I'm seeing this now. I actually called ACS earlier this week to increase my monthly auto debit b/c I just paid another of my loans off. I'll have to monitor to make sure the extra payment goes to principal
Posted on 5/31/13 at 8:28 am to sneakytiger
quote:
so I'm talking about $15-20k of payments applied to only $2-4k in principle
now its:
quote:
$15-20k of payments in excess
The first quote sounds just like a normal loan in a large amount over a long term. The bottom quote is entirely different. If true sounds like they screwed up along the way. You can log in and pull your account history and pull an amortization and compare how the money should have applied.
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