Results 1 to 6 of 6
  1. #1

    Default Why Do You Still Owe a Student Loan After the Government Pays the Lender

    My question involves collection proceedings in the State of:

    why do I still have a balance remaining with us dept. of Ed. the debt was paid off by the federal government 48 thousand dollars so why am I still owing. And thsy paid this debt off for me, they said we sill pay you just sign and return somepapers, so why are they still garnishing my annual federal tax return, this bill was paid. M

    y credit check shows that the federal government paid this debt for me, so why are they acting like I still owe? This debt was paid. Would it be worth getting a lawyer on this? These were federal student loans. I need help, I'm getting ripped off here. Anyone else sign some papers with the feds they paid off my college bill I they said just sign some documents, turn them in, my debt will be paid and shown as paid on my credit. On my credit report the debt is shown as paid by u.s dept. of treasury.

    Shows up as all paid in full by the dept. of treasury, and I have no balance with the dept. of treasury. Dept. Of treasury paid off the debt for me, so if anything why am I not owing the dept. of treasury? This all not making any sense. My college loans shows as all paid in full only credit report then why am I still having a balance with us. Dept of Ed, and why they still garnishing my tax refund every year??? Someone please help.

  2. #2
    Join Date
    Sep 2010
    Posts
    19,901

    Default Re: I Don't Understand How My Tax Refund Can Be Garnished and Why I Still Owe

    Chuckle. You didn't think that your federal loan guarantee was charity? The DOE will come after your returns to cover your default.

  3. #3
    Join Date
    Jun 2017
    Location
    California
    Posts
    459

    Default Re: I Don't Understand How My Tax Refund Can Be Garnished and Why I Still Owe

    If you had a federally insured student loan through a private lender, when you default, the government pays the lender and then the government collects the money from you.

  4. #4
    Join Date
    Oct 2014
    Posts
    8,238

    Default Re: I Don't Understand How My Tax Refund Can Be Garnished and Why I Still Owe

    The way federal guaranteed student loans work is that when the borrower defaults, the federal government steps in and pays the loan. This eliminates the risk for the lender which is why interest rates could be kept lower than they would otherwise. But when the federal government pays that debt, it steps in the shoes of the creditor and you end up owing the Department of Education. It is important to understand that the payoff of your original loan by the Department of Education does not eliminate your debt, it just transfers the debt from the original creditor to the government. And because the federal government is now your creditor, it can attach your tax refunds, among other things to collect what you owe. Since it is extremely difficult to get student loans discharged in bankruptcy you are going to need to sit down and work out how you are going to deal with those student loans.

  5. #5

    Default Re: I Don't Understand How My Tax Refund Can Be Garnished and Why I Still Owe

    I look on my experian report it just vanished mysteriously. All that remains everywhere now is that I owe. It was there that they paid it now its suddenly gone

  6. #6
    Join Date
    Feb 2008
    Posts
    1,179

    Default Re: I Don't Understand How My Tax Refund Can Be Garnished and Why I Still Owe

    Just because it's not on your credit report doesn't mean you still don't owe it.

    Don't be surprised if you get a wage garnishment in the future for any employer that pays you W-2 Wages.

    And it's difficult (if not impossible) to discharge student loan debt through bankruptcy.

    You might want to go back and re-read the "some papers" you signed and returned.

    1. Sponsored Links
       

Similar Threads

  1. Student Loans: Lender Sold Student Loan to Collections Found Out Loan Not in Default
    By Bellv2007 in forum Debts and Collections
    Replies: 1
    Last Post: 01-29-2015, 12:31 AM
  2. Student Loans: How Long Does a Lender Have to Collect a Defaulted Student Loan
    By driver3115 in forum Debts and Collections
    Replies: 6
    Last Post: 07-29-2014, 07:23 PM
  3. Student Loans: Reported Delinquent by Student Loan Lender While Applying for IBR
    By IVNIVS in forum Debts and Collections
    Replies: 3
    Last Post: 12-08-2011, 02:28 PM
  4. Student Loans: TERI Student Loan Turned Over for Government Collection
    By jnlwriter in forum Debts and Collections
    Replies: 2
    Last Post: 04-16-2009, 04:31 PM
  5. Student Loans: Lender Wants Student Loan Repaid While the Borrower Is Still In School
    By purple in forum Debts and Collections
    Replies: 6
    Last Post: 12-01-2007, 02:24 PM
 
 
Sponsored Links

Legal Help, Information and Resources