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Are Sallie Mae Signature Loans legal?
| Poll: Do you think Sallie Mae Signature Loans should be outlawed? Total Votes: 1 |
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|---|---|
| Yes | 1  |
| No | 0 |
| The creators should be skinned alive | 0 |
My wife recently found out that she had a Sallie Mae signature student loan (2 actually) in her name. Her father took out federal loans in her name while she was a junior in college (2001-2003) after facing some economic hardship. The loans were consolidated into Sallie Mae signature loans in 2006. The loan principle at this time was for approximately $45K. There were a few late payments and 2 forebearances in 2010-2011. We found this out when we applied for a new car lease this summer. We also found out that because of “capitalized interest” the loan principle had skyrocketed over the past 6 years to almost $80K and caused my wife’s credit score to take a nose dive.
I can’t figure out how this is happening (the doubling of the original principle). 98% of the payments have been made on time. How can the amount be so high considering that the payments have been made. It’s like she pays, yet the amount keeps going up.
My guess is that this is similar to what caused the mortgage crisis, but i’m not sure. The ultimate question is: Is this a legal loan program? Is there any way to get out of it?
Right now, we pay over $300/month = $3,600. Each year so far, they add $2,500/year capitalized interest. I don’t see how she’ll climb out of this in less than 40-50 years.
It seems to me that my wife will never get out of this loan unless significant amounts are paid off immediately.
Please shed any light on this subject.
Because the government does not subsidize private student loans, the rates and terms are not regulated the way they are for federal loans, which makes private loans more risky and expensive. Private student loans with very unfriendly terms are legal, but you might want to talk to a qualified attorney in your area about whether or not there is any fraud in your case.
It can be very difficult to get on track after late fees, collection costs, and capitalized interest raise a loan balance. I recommend you read the loan contract very carefully to learn about the private loan’s particular terms. More about dealing with private loans is here: http://www.studentloanborrowerassistance.org/understand-loans/private-student-loans/