Am I being scammed by Aidvantage (and Navient)?

Disputing Your Debt
#1

Hello, I am not sure if what I am seeing here is just a symptom of a broken, predatory, but ultimately legal system; or if I am just being ripped off. Maybe both.

13 years years ago I took out $49,275 in student loans. After graduating I enrolled in IDR, which by the way is also broken. To date, I have paid $30,359, of which $29,000 went to interest (!). I now owe $53K, which is $3K more than the original amount. This is despite apparently $6K being applied to principal. Right now I am on track to be done with this in 20 years at $576 per month. How is this possibly legal? I know we love enriching the investment class with Student Loan Backed Securities, but this is pure insanity.

How am I supposed to save for retirement? Who is going to take care of us once we’ve given our best earning years to the investment class?

-Conor

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#2

I know this thread is more than a year old but it has no answers and the topic matters.

People need to understand capitalization of interest. Interest is capitalized (eg added to what you owe and so future payments figure interest owed based on that higher balance) which makes your balance owed grow even when you are making payments. If your payments are low enough that you won’t pay the entire amount of interest that is owed with that payment you will have the remaining interest will be capitalized as your payments aren’t high enough to cover all of the interest for an individual payment. Biden had the Dept of Ed stop capitalizing interest with the new Save Program he introduced (which is now ending due to the courts and people on the Save program will need to sign up for a new plan) and capitalization resumes sometime this year (Aug I think).

Example: I borrowed 92K for grad school, I paid back 102K and still owe nearly 99K (with 7 years of repayment left). Why? because I had about 3 years worth of forbearance (cancer and no steady employment and/or zero payments owed due to income too low thus all the interest for each of those months was capitalized) and at other times my payments were far below what would have paid off my loans in 25 years (grad school loans).

If you get a job at a non-profit or government organization and make 120 payments the remainder of your loan will be written off after those 120 payments (those payments are NOT retroactive UNLESS your employment was for a non-profit/government organization. Then you can retroactively add those payments only to the 120 months. Additionally when the student loan is written off the remaining balance will NOT be taxed (eg you won’t get a 1099-C for the amount that was written off and have to pay taxes on that as if it was income).