Student loan default, Dept of Education referred it to a collection agency, which is suggesting a rehab progra?

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My student debt as of now is $ 4,247.77. My social security benefits has been offset to the US Treasury to the tune of $ 8,473.65 to date, almost double the debt, but the debt doesn’t reduce. Collection agency has told me that the offsets go directly to interest and penalties and is being treated like a mortgage, with interest being paid first. Is this right and what can I do?

1 Comment
  1. Reply
    allukcatsbaby
    May 19, 2011 at 4:55 pm

    Yes, its a moneymaker- a huge one. They will, just like any loan, take the interest first then take the principle unless you pay in bigger chunks than the minimum. Sorry, theres not much to be done except possibly declare for bancrupcy (and thats not much of an option since this debt isnt a huge one- you may try seeing if they can work out a better payment plan and hire a budget lawyer type of person (not sure what there called) to help work out payments etc.

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