I Don’t Know Which Was Worse, the Cancer or the Student Loan. – Paige

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Dec. 28, 2009

“Dear Steve,

Old Student loan rehabilitated with tagged on interest and fees. Need help reducing the capitalized interest added to the loan while I had cervical cancer and lost my job and could not make payments. Do not know where to turn. 7900.00 in capitalized interest was added .

I have an old stafford loan with Suntrust Educational loans (guarantor : Illinois Student Assistance Commissin), In 1999 I was dianosed with cervical cancer; was unalbe to work after losong my job and was in a situation where I quit paying on the loan.

With odds of long-term survival against me, I did not even contact the student loan program to let them know what was going oin. INstesad it wentint collections. In 2004, after beating cancer, my boyfriend at the tiem convinced me to contact themand get back ontrack.

They had me make payments for a ful year before selling the loan to ACS and pklacing it back in curret status; but added 7,900.00 in capitalized interest to the loan amount. . The Original loan amount was 11,750.00. After 4 years of scheduled payments; the balance is still over 13,100.00. I amnot sur e who to turn to for help. I realizedd I made a mistake not contacting them when I was sick; but also feel there should be some relief due; after getting back ontrack and not missing a payment since rehabilitating the lloan. Who can I turn to for help?

Paige”

Steve’s Answer:

Dear Paige,

Well, it doesn’t really matter that you contacted them. At least the penalties are not still accruing. If you had not contacted them your balance might be twice as high now and you could be facing legal action and having your tax returns intercepted or wages garnished. I think your boyfriend gave you some decent advice. If you had let it go longer the amount due would have been even more.

It doesn’t seem like you are permanently disabled and you sound like you’ve made a healthy recovery from a nasty cancer scare. Not everyone is as lucky so you do have some things to be grateful for.

I’m afraid the news isn’t great. Private student loans like the one you got have few options. If this had been a directly government funded Stafford loan you would have had some additional options.

Affiliated Computer Services (ACS) is a loan servicer and is really just processing your payments. It seems the most likely solutions at this point are to either pay more than the minimum to pay the loan off quicker, come up with a lump sum settlement offer to see if they will accept less to satisfy the debt, or look into the Income Based Repayment program (IBR). The IBR won’t eliminate any other the debt but it can give you a reduced repayment amount that might be easier for you.

Big hug.

@GetOutOfDebtGuy