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*Updated* Advice Needed! College Collection is Haunting Me

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Established Member

*Updated* Advice Needed! College Collection is Haunting Me

Hey there myfico people, first time posting so I hope this comes out well enough and hope someone can possibly help me in my situation!

 

Mods feel free to move this to somewhere else if you think its out of place or needs more visibility.

 

The TLTR will be at the bottom if this is too long.

 

I have a debt from college that went into collections in 2016 from when I attended college in Virginia in the years 2013-2014. The amount that came from the university was in total $12,286.50.

 

 

Once it went to collections, the amount skyrocketed to $17,223.13

 

 

I just got documentation from my collection agency and as I fliped to the next page it shows my payments to the collection firm and my starting amount from when my account first went into collection shows:

 

Beginning Balance: $17,223.13

 

Now as I stated earlier, I have been paying the last two years, and the total payments sent to them totaled around $2,350. You factor in the returned check fees that I accrued during that time of $85 and my total payment to the collection firm came to $2,265. And after subtracting, that from the beginning balance amount of $17,223.13 it came down to $15,258.13

 

Statement Balance: $12,206.50

Fees: $3,051.13

Total Balance: $15,258.13

 

I contacted both the school and collection law firm and come to find out that the collection firm doesn't own the debt, they just "service" the debt.  They just pay the University (who still owns the debt) because the college doesn't have the manpower to service it themselves.(Such BS!)

 

 

Now since I have been a lurker on the myfico forum for about 2-3 months I learned a wealth of stuff about everything credit and about consolidating collection debts/settling debt. I did my research on how to approach settling. I tried to settle with the collection  firm who directed me to the university since they only “service” the debt. I then contacted the university who stonewalled me saying I must pay in full (no settling). This was due to the Virginia state law (the state where I attended school) that stated that you are not able to settle college debts once it has gone into collection….

 

 

I’m now in a hard situation, because all of my loans are from the Department of Education and when I left school I had put them into forbearance. When I talked to the University rep recently who was handling my account, I was told that this loan started as a Department of Education loan but since I did not finish my four years of college they kicked the loan onto the university who then kicked it to collections to handle.

 

Need some choices and or ideas on how I may be able to remedy this situation.

Don’t worry I can take the criticism.

 

TLTR: 19 year old me screwed future by having a collection from college tuition. Virginia laws does not allow me to settle debt so I have to pay the full $15,000+ or my credit will continue to suck/suffer.

 

***Updated***

Edited for legibility and photo added of charges. Also read the comments where I make more detailed explanations where we  also make big strides on my situation.

 

 

 

 

Nor form.PNG

 

Nor form 3.PNG

 

 

 

 

 

 








Message 1 of 36
35 REPLIES 35
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Legendary Contributor

Re: Student Loan Collections Are Haunting Me: Halloween Special

What type of federal student loan was it?

Federal student loans have separate and explicit requirments under the the Higher Education Act, such as exemption from the normal credit report exclusion requirments for derogs reported on the loan, mandatory reporting requirments, and ability to rehab a defaulted loan and bring it back into non-default status.  Requirments vary by type of loan.

 

Did the delinquent student loan actuall go into default, which is normally done on federral student loans when they become 120-days late?

 

Have you looked into rehabbing the federal student loan?

Message 2 of 36
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Established Member

Re: Student Loan Collections Are Haunting Me: Halloween Special


@RobertEG wrote:

What type of federal student loan was it?

Federal student loans have separate and explicit requirments under the the Higher Education Act, such as exemption from the normal credit report exclusion requirments for derogs reported on the loan, mandatory reporting requirments, and ability to rehab a defaulted loan and bring it back into non-default status.  Requirments vary by type of loan.

 

Did the delinquent student loan actuall go into default, which is normally done on federral student loans when they become 120-days late?

 

Have you looked into rehabbing the federal student loan?


 

Some of them are Ford subsidize and unsubsidized loans and the rest (bulk) were “tuition and fees” as stated on my documents from the university. I think that my student account did go into default, the lady who was handling my account at the school said something similar to that. I haven’t looked into rehabbing it or anything due to the fact that I was told point blank I must pay the full amount and there’s no way around it. The person I talked to was very convincing and stated that Virginia law said that I would have to pay the full amount which meant no settlements or goodwill help.

To make matters worse on my credit report the collection agency reports literally nothing but the bare minimum which has destroyed my credit even more. They report no month to month payment so that wherever you’d usually see that I’ve made payments for Jan, Feb, Mar ect it shows absolutely nothing. Also as stated on my credit report when my account went into collections it’s was around $13,778 then it went to $17,223.13 so right off the bat when I made my first payment I was at 138% completions of my collection rather that 99% like with anything else. Basically showing that I’m in the negative and am delinquent. It’s frustrating. I’ve been paying for two years and I’m still in the negative.








Message 3 of 36
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Established Member

Re: Student Loan Collections Are Haunting Me: Halloween Special

Smiley Sad I guess nobody has any ideas....








Message 4 of 36
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Established Contributor

Re: Student Loan Collections Are Haunting Me: Halloween Special


@Mitobuild94 wrote:

Smiley Sad I guess nobody has any ideas....


Just give it some time; someone will answer your question.

 

I know how you feel about these student loans. Although mine aren't nearly as high as yours, it still shows that I owe basically 200% of my student loan. It started at $2,500, and because I didn't pay it for almost 7 years, I accrued some serious interest. It more than doubled what I owed on my student loan, and now I'll be paying $70/month for the next 7 years. I actually pay $100/month so that I can save myself a little money over time, but it still sucks.

I think I've found the sacred map that may lead me to this garden everyone keeps talking about.



Officially collection free as of 3/19/19!!
STARTING SCORES: 377 (11/2013) & 580 (3/2018)
Message 5 of 36
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Established Member

Re: Student Loan Collections Are Haunting Me: Halloween Special


@Queen_Etherea wrote:

@Mitobuild94 wrote:

Smiley Sad I guess nobody has any ideas....


Just give it some time; someone will answer your question.

 

I know how you feel about these student loans. Although mine aren't nearly as high as yours, it still shows that I owe basically 200% of my student loan. It started at $2,500, and because I didn't pay it for almost 7 years, I accrued some serious interest. It more than doubled what I owed on my student loan, and now I'll be paying $70/month for the next 7 years. I actually pay $100/month so that I can save myself a little money over time, but it still sucks.


I'm just in a weird spot because I see people on myfico talking about numbers that are in the range of what you owed. I'm new but I've yet to see someone have a school debt 15k+ amount that is owed in collections. I literally feel like I'm in a grey area because usually school debts are in a loan form with low rates. It's just such a dark cloud over my credit.








Message 6 of 36
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Valued Contributor

Re: Student Loan Collections Are Haunting Me: Halloween Special

Actually most of the people on here who have accounts in collections have well over $10k. By that point the loan has, of course, ballooned due to interest. The different with yours is that it is a combination of owing the school directly and federal loans (Direct Loans if I'm eating the picture right). I've never seen this before and I have no experience with it so any advice I give is mostly my opinion.
So you've got to different things...Idk if the University part is technically a private collection or what. Maybe you could ask. But I'm almost certain it is completely separate from your federal loans. If it's private it puts it under a while different set of collection rules. SOL, the need for a judgement before they can garnish, etc. I don't see why they say you can't pay this part directly to the school, but I don't know about this debt. They seem to have been tricky so far and not willing to give you any information about the university debt or the federal loans separately.
If they are indeed separate, I'd think of it this way: you can place priority on the loan or the university debt but you only have so much money to send per month. Where would it best be spent? What I would do is to focus on this school loans. There are so many more protections and options with them even though they are right, those you cannot settle and you need to deal with the collection agency.
Step one, I don't trust collection agencies and more importantly, if they are not giving an accurate reporting of what you are paying, I would double check they are actually in charge of the loans. One place I would look is on my credit report. What is the name and is the balance reporting as going down each month? If it is, I wouldn't worry about how it looks on paper (although I would keep a paper trail, such as payment confirmations, bank statements, etc.). I've also written a letter requesting payment history from them and got that in writing.
Second, check the National Student Loan Database (NSLDS) website. Who does it list as the collection agency, confirm the loan types, and what are the balances they are collecting on?
I'm assuming the Federal Loans are in default? You can get them out of collections if you rehab them or consolidate (you can only do this once in the life of the loan). Most people rehab, but whatever works best for you. You make a certain amount of payments (~9 for rehab) which can be based on your income, and they get sent back to a loan servicer. If you have any money past the federal loan you can send it to the school debt but I'm these student loans are more important. They don't need a judgement to garnish you or anything. Best to get them out of collections.
Once they are with a servicer again (these were always federal loans btw, the gov just sub-contracts out now and doesn't do any of the repayment handling now = crappy service at the lowest bidder. Ugh), you'll need to decide how you want to repay them. You could try an Income-driven repayment plan such as REPAY which will only be 10% of your disposable income and a payment as low as $0. This would allow you to be in "repayment" for the student loans while still repaying the school debt. And you can alway send in higher payments than the minimum to keep interest down. Some people pay the interest to keep it from eventually getting capitalized.
Or you could sign up for the standard plan if you're sure you can make the payments. You're eligible for deferment or forbearance again if you absolutely need to use it. You can use the repayment estimator on the gov website to see how much it can possibly cost you over the life of the loan per plan, with an interest and timeframe breakdown.
Sorry for the long post, but I'm hoping it was helpful. Let me know if I can help you further and the Dept of Education chat can be helpful.
Good luck!
Edit: Sorry, I missed that you said the agency does not report your monthly payment to the bureaus (balance going down). This sounds very suspicious. I'm not sure they can do that. If they are your collection agency for sure, I would dispute this with the collection agency or the CFPB if you can't get it resolved.



Message 7 of 36
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Valued Contributor

Re: Student Loan Collections Are Haunting Me: Halloween Special

I'm really confused here. For clarity:

 

Are you saying you had Federal William D. Ford Direct loans and did not graduate?

 

So the loans were kicked back to the school and now the school put you in collections?

 

Who is the servicer of your federal loans?

 

Are these different amounts you have borrowed or is this the same money?

 

If you took a federal loan each semester, then the school got paid that semester and you should not owe the school anything assuming the loans covered everything( I'm sure they did or you would have had a hold that kept you from registering the next term). I have worked in a college for over 20 years and have never heard of anything like this if I'm understanding this correctly. 

 

Started Rebuild 4/2018: EX 616| TU 604| EQ 621

Current 5/28/20:


First Goal Score: 750+ Reached 3/2019

Next Goal all over 800
Message 8 of 36
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Valued Contributor

Re: Student Loan Collections Are Haunting Me: Halloween Special

Okay, I went back and read your invoice better. So you had loans but did not have enough to cover all the fees or you did not pay them and the balance carried over. I don't understand why the school let you do this. So are these the only two terms you attended. Fall of 2013 and Spring of 14? Did you complete at least 60% of spring before dropping out?

 

It sounds like you should have been offered a lot more than you got in loans as since you where pell eligible it was definitely you did not have family contributions to make up the balance. Regardless you did not have enough in aid and loans to cover the first term tuition. I'm suprised they let you registered for the second term unless you had agreed to some sort of payment plan.

 

Are the federal loans still in deferment or are you paying them too? 

 

These are different pots so you owe them both. It sounds to me like you got some really crappy advice from the Finaid counselor you talked to originally at the school. 

Started Rebuild 4/2018: EX 616| TU 604| EQ 621

Current 5/28/20:


First Goal Score: 750+ Reached 3/2019

Next Goal all over 800
Message 9 of 36
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Re: Student Loan Collections Are Haunting Me: Halloween Special


@Sabii wrote:
Actually most of the people on here who have accounts in collections have well over $10k. By that point the loan has, of course, ballooned due to interest. The different with yours is that it is a combination of owing the school directly and federal loans (Direct Loans if I'm eating the picture right). I've never seen this before and I have no experience with it so any advice I give is mostly my opinion.
So you've got to different things...Idk if the University part is technically a private collection or what. Maybe you could ask. But I'm almost certain it is completely separate from your federal loans. If it's private it puts it under a while different set of collection rules. SOL, the need for a judgement before they can garnish, etc. I don't see why they say you can't pay this part directly to the school, but I don't know about this debt. They seem to have been tricky so far and not willing to give you any information about the university debt or the federal loans separately.
If they are indeed separate, I'd think of it this way: you can place priority on the loan or the university debt but you only have so much money to send per month. Where would it best be spent? What I would do is to focus on this school loans. There are so many more protections and options with them even though they are right, those you cannot settle and you need to deal with the collection agency.
Step one, I don't trust collection agencies and more importantly, if they are not giving an accurate reporting of what you are paying, I would double check they are actually in charge of the loans. One place I would look is on my credit report. What is the name and is the balance reporting as going down each month? If it is, I wouldn't worry about how it looks on paper (although I would keep a paper trail, such as payment confirmations, bank statements, etc.). I've also written a letter requesting payment history from them and got that in writing.
Second, check the National Student Loan Database (NSLDS) website. Who does it list as the collection agency, confirm the loan types, and what are the balances they are collecting on?
I'm assuming the Federal Loans are in default? You can get them out of collections if you rehab them or consolidate (you can only do this once in the life of the loan). Most people rehab, but whatever works best for you. You make a certain amount of payments (~9 for rehab) which can be based on your income, and they get sent back to a loan servicer. If you have any money past the federal loan you can send it to the school debt but I'm these student loans are more important. They don't need a judgement to garnish you or anything. Best to get them out of collections.
Once they are with a servicer again (these were always federal loans btw, the gov just sub-contracts out now and doesn't do any of the repayment handling now = crappy service at the lowest bidder. Ugh), you'll need to decide how you want to repay them. You could try an Income-driven repayment plan such as REPAY which will only be 10% of your disposable income and a payment as low as $0. This would allow you to be in "repayment" for the student loans while still repaying the school debt. And you can alway send in higher payments than the minimum to keep interest down. Some people pay the interest to keep it from eventually getting capitalized.
Or you could sign up for the standard plan if you're sure you can make the payments. You're eligible for deferment or forbearance again if you absolutely need to use it. You can use the repayment estimator on the gov website to see how much it can possibly cost you over the life of the loan per plan, with an interest and timeframe breakdown.
Sorry for the long post, but I'm hoping it was helpful. Let me know if I can help you further and the Dept of Education chat can be helpful.
Good luck!
Edit: Sorry, I missed that you said the agency does not report your monthly payment to the bureaus (balance going down). This sounds very suspicious. I'm not sure they can do that. If they are your collection agency for sure, I would dispute this with the collection agency or the CFPB if you can't get it resolved.

 

First off thank you for understanding and the nice thorough explanation.

 

Okay, so this is a collection from the university so i'm thinking it may be a private collection from them since I couldnt get a education loan to fix this.  Secondly, after some reseach I found that nothing in this collection is from a federal loan that I am paying back so essentially now its all me oweing the school directly and fee's. I do have The pell grant that was on the sheet but that was a grant and nothing I'd have to repay. (I think)

 

They havent talked about garnishments or anything of that nature so I'm good there. The reason that I was told as to why I could'nt just pay the school and keep my credit presine is "were undermanned so we hired somebody else to handle the payments". Absolutely sucks for me because now my credit suffers and I now owe more for it being in collections. Also the school still owns the debt so I basically have to pay the fee for it going into collections for absolutely nothing but the school did'nt want to handle it.... sigh...

 

 Yes they were very tricky I only learned here on the myfico forums to start asking questions, thats the only way I got documentation that I legit owed a debt otherwise it was just phone calls and me being to young and ignorant to ask questions. Also I had gotten a payment verification sheet from them in the mail. The first page had the letterhead and everything saying I owed $15,000+ but the second page that had all of my payments "recorded" had a lists of dates and payments from me but that page didnt have a letterhead. Looked like something off of word that was typed up unlike the document I have at the top in my post thats from the school. (Just something I've noticed)

 

This collection from my point of view is just one big payment i send to the collection agency. It doesnt show that x amount is goin to this and x amount is going to that so I dont think it is seperate debts all into one payment.

 

I dont trust the collection agency because not only did this make my credit trash they have actively chosen to look the other way. I have already opened disputes months ago about their reporting and how they make it so much worse. Where the calendar is on your credit report would show green checks or red x's for your acount, under the collection account there is no calendar.... Like no record of no payments month to month is shown so creditors and loan officers are too scared to aproach me because I tell them I cave a collection for 15k from school there is no way to verify that from their end. They see it as things from you bought a car and never paid, to credit card bills, to medical bill. Basically anything is fair game because there's nothing available. Smiley Mad  I get furious just typing it its so maddening! Also they just started reporting that my balance is going down, it wend down $15 and my score shot up 25 points. Thats how bad this is wrecking it all.

 

I checked the database. BTW thank you that was greatly needed I now know where to go to see where all of my loans/grants are. But sadly nothing from this school in collections is on there which leads me to believe I outright may just owe the school. I did see the loans from my first year of college at another school (that were handled correctly) and those were accurate and I'm current on those so no issues there.

The collection agency wasn't listen on the sight but i dont know what to make of that so maybe you can fill me in on that. Also All of my federal loans are from my first year of college school in which i'm current on so no need to rehab that.

 

I'd be interested in a repayment plan for this collection if i was able but I'm not sure I apply there. 

 

Your post wasnt too long and I'm thankful for the information you provided. I'll be still looking for a solution for my problem so I'm all ears.

 

 

 








Message 10 of 36
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