Debt: Started with $193,000+/- as of April 2018
Down to: $42,500 as of today
Job: Attorney + Realtor
Plan: Income-Driven Repayment (I've never changed this, or applied for anything else)
Problem: Despite having paid over $150,000 in the last 18 months, and being 'Paid Ahead' until 2050, Great Lakes sent me this in May:
"You're enrolled in an income-driven repayment (IDR) plan for your student loans, which must be renewed on an annual basis. You're currently not eligible for a reduced payment because your income no longer qualifies based on the documentation we received.
What this means for you:
- Your payment will increase to $668.85 for your loans in Income-Based Repayment or Pay As You Earn plans. If you're not on Auto Pay, your increased payments are due beginning on 8/7/2019.
- Your interest will capitalize if you don't pay it. The unpaid interest that has built up, or accrued, will be added to your principal balance—a process called capitalization. We estimate $5,703.45 in unpaid interest will be capitalized.
Yes, my salary went up significantly as of last year as I had a full year of work to show for taxes.
First: what kind of bullshit is this? I had something like 10 different loans in grad plus and Stafford. I've paid the highest interest ones off, and back been going down the list. Now I have 3 loans left.
On those remaining 3 loans, there was something like $3,000 of interest left. I had not paid these yet, because they were the lowest interest rate loans, and I was going to pay them last.
Nevertheless, they decided to capitalize about $1,200 of interest out of the $3,000 or so. Despite the fact I was paid ahead, and had paid about $37,000 in interest last year.
Is this all normal?
Second, my payment increased to $668.85 as you see above. But last week, I submitted a payment of $2,300 towards 1 of the 3 remaining loan tokens.
I choose the custom allocation, and pay 100% towards the loan with the highest interest – loan token #1 below
The 3 remaining loans consist of:
1: subsidized loan – 6.8% – $9,000 – only $100 of this is interest since they capitalized $600 last month
2. subsidized loan – 6.8% – $9,000 – only $100 of this is interest since they capitalized $600 last month
3. Unsubsidized loan – 5.41% – $26,000 – about $2000 of this is interest.
To my surprise, they took that $2,300… and instead…did this:
Applied to the loan tokens as follows:
- $1,500 to principal and $100 to interest
- Applied $29 to interest
- Applied $610 to interest.
First of all, WHY?
Second, why in these varying amounts?
Third, the amount they subtracted for interest they allocated EXCEEDS my monthly payment amount of $668.
Fourth, they used to NEVER do this in the past. They would re-allocate my payments against my will, but they would only pay interest in the amounts of like $20-100… NOT $600+
Fifth, why/how is this happening now, when both my principals and interest amounts are lower than ever before.
None of this makes any sense to me, and I studied finance as part of my MBA LOL.
Of course, I called, but the 18-year-old high school grad who gets $12/hr to do the work of the devil was so clueless that she was terrified to even answer the simple questions.
I'm expecting a callback and explanation in 48 hours, but would like to know if I'm getting screwed or lied to.
Please help me and thank you in advance!
submitted by /u/Christos89