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CalAttorney2, Attorney
Category: Legal
Satisfied Customers: 10244
Experience:  Civil litigation attorney for individuals and businesses.
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To try and finish my college edication when my children were

Customer Question

To try and finish my college edication when my children were all in school, I took out several small student loans in the late 80's Early 90's. Although I could not finish my Masters, I graduated in1994 and worked part time until I landed a fulltime job in my field of horticulture with Washtenaw County in Michigan. After many different loan agency 'handlers' and much confusion, I consolidated the smaller $1500-2000 loans into one loan for about $20,000 in 1994. Since then I tried making payments whenever possible. Sadly, through a divorce, serious family medical problems and actually someone at the Michigan Guarentee Agency (MGA) telling me that the only way to negotiate affordable payments was if the loan defaulted to the Department of Education (DOE,) I did default. Yet, instead of the loan going to the DOE, as I was told it would, the MGA garnished my wages. After talking to several people their I was told that I could get my loan out if default by entering into Repayment Agreements. Which I did, several times. After five years of fulfilling the timely and "consistent payments" as I was told I could through "voluntary wage assigment" I noticed my loan was never taken out of default and told Wage Garnishment did not 'count'. So, I was sent another Repayment Agreement and proceeded to make another couple years of payments until I received a "Statement if Good Standing," and believing my loan was out of default I proceeded to apply for the government forgiveness now I have paid the original loan plus interest and collections equaling more than two and a half times the original loan, and I find out I am not eligible because it is Still in default! At this point, whenever I try talking with MGA I am told I must "rehabilitate" the loan, meaning refinance! I believe the MGA is has been extremely fraudulent and misleading in such ways as to keep me forever in their debt. The years of good faith payments to them have a financial burden that is threatening my health and well-being, my home and has made it impossible to adequately prepare for retirement and old age. I am 58 now and my student loan balance is stll over $38,000 and growing exponentially every day, especially with the monthly MGA collection fees (which my contract states very clearly can never be more than a "one time collection fee") keeps the balance beyond my ability to ever pay it off! My gross income will never be above $50,000/year (for five years it went down during government wage freezes and mandatory 'banked leave days.') With taxes and so on my net pay is less than my expenses every month, yet MGA is still extorting me through their unwillingness to take my loan out if default unless I refinance to their benefit and my continuing indentured servitude. Please help me put an end to this nightmare? Sincerely, ***** *****(###) ###-####
Submitted: 1 year ago.
Category: Legal
Customer: replied 1 year ago.
DOE Ombudsman was not helpful
Expert:  CalAttorney2 replied 1 year ago.

Dear Customer,

I am sorry to learn of this situation.
You are going to want to consult with a local attorney (you may have a claim for fraud as well as breach of contract against the lender), but you need someone to look over these documents that you signed previously and see what exactly you agreed to and what terms and obligations the lender was agreeing to in the prior modifications.

Based on what you have posted, it appears unreasonable that your student loan should still be in default at this point - but unfortunately it requires a review of your actual documentation in order to help you identify your specific rights - and you can move forward from there (either pursuing affirmative claims against the lender, or alternatively, having your lawyer negotiate with the lender in order to allow you to consolidate through the DOE).

You can find local attorneys using the State and local Bar Association directories, or private directories such as;; or (I personally find to be the most user friendly).

You should be able to find a solo or small practice attorney that will be willing to offer you a low cost or free consultation.