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My Ex Doesn’t Bother to Make Student Loan Payments After the Divorce – Bethann

By on December 7, 2016

Question:

Dear Steve,

Navient. Parent Plus Loan from 2 children- 4 yrs of school. started at 85K and is now at 122K!

What are all these capitalized interest large amount added on in history?

I acquired a parents plus loan of 85K from 2006. It was consolidated with my SSN and my ex husband’s SSN. Our divorce decree says he pays college debt. he has stopped. I have sued him and he still hasn’t paid.

I have the whole debt and I’m paying 550 a month. It is now at 122K! Should I default? That’s my only choice. The cosigner is dead. Navient doesn’t care about my ex.

Bethann

Answer:

Dear Bethann,

From what I can piece together from your question it sounds as if you obtained a spousal consolidation loan prior to July 1, 2006. After that date it was no longer permitted for spouses to consolidate together.

It really does not matter what the divorce agreement says. That’s just an understanding between you and your ex-spouse and not between you and the lender.

If the loan was ever delinquent, in default, or the payments did not cover the accrued interest then the balance can grow significantly.

If this really is one of those old spousal consolidation loans then you are left in limbo. Congress eliminated those loans but never enacted any mechanism to break the loans apart. So if the servicer wants to go after one party rather than another, they can. Both parties are equally responsible for the entire loan balance.

Now even though the current loan options appear to have a loophole to allow the former spousal consolidation loans to be consolidated into a new loan, read this, the common understanding by practice is that they can’t.

To this day the Department of Education stands behind the position below even though I can find no rule or regulation that supports that point of view.

READ  It's Unfair We Can't Consolidate Our Spousal Consolidation Loan

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Spousal consolidation loans are the ultimate black hole of student loans. They exist but without any real options or help.

You can always default. But if you do you need to be aware if you normally receive a tax refund, it will probably be intercepted. To avoid the intercept, just adjust your withholdings so you will not get a refund. Additionally, after a significant period of default of about 270 days, don’t be surprised if you are subject to an Administrative Wage Garnishment. To add insult to injury, when you do default, an additional amount of around 18 percent can be added to the loan balance for collection fees.

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About Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

2 Comments

  1. Bethann

    December 7, 2016 at 1:33 pm

    Question asked.

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