t_rone77 Posted May 9, 2005 Report Share Posted May 9, 2005 Could you please offer a little advice to me: I have a student loan which is a Perkins loan to be exact that has since defaulted. It was taken out in 1996 for the amount of $2400 and with interest and late fee is now around $3000. It has of course gone to collections with General Revenue Corp, but was not purchased by them, therefore hasn't been written off, they were just assigned to collect. I am willing to pay the $3000 in full to Iowa State University, the school I attended, and they will accept payment, but my issue with them is that they want me to also pay the collection agency fee which is 33% percent of the loan even though I choose not to deal with the CA. My understanding is that since the original creditor still owns the loan and has not sold it to the CA, that it is my legal right not to deal with the CA and just deal with the OC. Need some advice as to how to avoid paying collection fee. Is there anything as in a document that I could present to the school or anything I should ask them to take it out of collections without me having to pay collection fee? Link to comment Share on other sites More sharing options...
LynnInMN Posted May 9, 2005 Report Share Posted May 9, 2005 Technically you agreed to pay "all collection costs applicable by law" when you signed your prom note. It is your legal right not to deal with the CA but the school can charge you the fees either way. When you defaulted the loan was accelarated and the school hired a CA...even if you pay the school directly, the school is under contract to pay the CA their fees. Sometimes a school will accept a settlement, but since they still have to pay the fees, they take the loss. Try offering the school a settlement. They may bite, they may not. It is up to them. Link to comment Share on other sites More sharing options...
DocDon Posted May 9, 2005 Report Share Posted May 9, 2005 Is this not something that can be rehab'ed in order to clean up the negative reporting? Link to comment Share on other sites More sharing options...
LynnInMN Posted May 9, 2005 Report Share Posted May 9, 2005 Is this not something that can be rehab'ed in order to clean up the negative reporting?If could be, put with Perkins they generally dont negate the collection costs. The agency still gets paid on the rehab and the school ends up taking a loss if they write off the fees. Link to comment Share on other sites More sharing options...
DocDon Posted May 9, 2005 Report Share Posted May 9, 2005 If it's possible then to rehab and get the negative information removed, then I would think paying the collection fee would make it worth it.However, I seriously question the 33% "collection fee". Link to comment Share on other sites More sharing options...
LynnInMN Posted May 9, 2005 Report Share Posted May 9, 2005 Perkins loans always pay higher fees, partly because they are smaller placements and generally lower dollar amounts. I will call my old buddy at the UofM tomorrow...she is in charge of collection agencies and fees. They may pay less on Perkins but it really depends on the contract with the agency. I know when I collected Loyala university, I always got 33% in fees and that was almost 10 years ago. The most Loyola would right off was 15%. Link to comment Share on other sites More sharing options...
LynnInMN Posted May 10, 2005 Report Share Posted May 10, 2005 I called my friend who handles the collection accounts for the University I used to work at. Collection fees on Perkins range from 20-50%. They pay 20% for 1st placements or new defaults and 50% on legal accounts. The average is 30-35% for accounts that have been in default over 2 years and are a second agency placement or more. Most accounts stay at each agency for 9-12 months before they are recalled and shuffled. The agencies doing the second placements or more are using more resourses to track down the borrower, thus the higher cost. The most they will settle off on is 10% of the collection costs and there has to be proof of hardship or low income. They also collect actively thru state and federal taxoffsets. Link to comment Share on other sites More sharing options...
DocDon Posted May 10, 2005 Report Share Posted May 10, 2005 Guess that makes up for the 4% interest being charged while the loan was active. Link to comment Share on other sites More sharing options...
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