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Almost completing my rehab loan


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I have been reviewing my past history for my defaulted loan. I have paid over a year and a half, I started the rehab program and first payment was in August 2004 and I have been paying every month on time since.

I called the ASA today and spoke with a representative. She asked if I would like to continue to make payments to the ASA instead of going with a lender until the collection cost and past due interest has been paid up. I asked a lot of questions and found some interesting answers so now I need an expert on student loans to compare notes:

I asked how the payments were used:

She said, first, the past interest, second, the collection costs, then third, the principal.

She said the Federal has lowered the collection percentage from 25 to 18% recently.

She said so long as you stay in the payment program and not sign an agreement to a new lender to complete the rehab program the collections continue to accrue.

She said the collections only stop once you have sign the rehab agreement and a lender agrees to work with you. However, you still owe the past collection fees that were established once the rehab program began.

I have two accounts:

Today the figures are:

Account #1

Past due bal 900

Past due int 230

Col cost 1,499

Total 1,388

Account #2

Past due bal 6,784

Past due int 1,570

Col cost 1,499

Total 10,193

Total payments to principal since 8/04 -0-

When I asked the board how payments are used LynnIMN said that the sequence of payments was past due interest, principal, then collection costs. This Guarantor stated that they are following the Federal regulations how how they record the debt...and that whoever stated that the pricinpal is paid secondly is wrong...

Who is right?

Also if the guarantor is right then the principal never gets paid this way...

Where is this Federal regulation under the Department of Education so I can see how the payments are done?

She also said that the collections cost that started will continue and never go away until the past due interest and the principal balance is gone...

interesting bec the sequence of the repaying of this debt helps the collection cost to increases everything thus you will never get it paid.

I am upset that they did not tell me that the payments would never touch the principal bal nor wud the collection cost go down!

Again I see the "obudsman" for student loans on this board. I have asked about this obudsman service for student loans before but was told there isn't one but I still see the board telling others to go to your obudsman for student loan questions???!!! Could the obudsman be under the Department of Education????



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