William
Warsaw,#2UPDATE EX-employee responds
Sat, September 06, 2008
NELA and the government send defaulted student loans to PCR for collections. The 22.5% collection fee is totally legal and if you'd have listened to your representative in the first place they would have informed you that upon completion of the WDF or Federal Loan Rehabilitation Program it would be removed and recapitalized at 18.5%. PCR does not fill out a WDF for you. They can't. They don't have your signatures. All they have is the info on file. You can either pay monthly depending on the balance of your loan thru the rehab program or pay based off your income thru WDF. They weren't pawning your loan on someone else. They were simply trying to help you. Call Sallie Mae if you're not sure who has your loans. You obviously borrowed it and have to pay it back sometime. Why not do it now?
Stephen
Renton,#3Consumer Comment
Thu, July 10, 2008
It's true that when student loans default, the guarantor is required to purchase the loan and collect on it. Furthermore that guarantor may sub contract out the collection of the debt to a 3rd party debt collector. In this case, the debtor admits the student loans defaulted, but does not make clear whether NELA is the guarantor or the debt although it's clear Pioneer is trying to collect on something. I'm not sure what role this allegedly falsified student loan application plays into this. One thing though is absolutely certain. Student loan Guarantors such as NELA and their 3rd party debt collectors do not get to front load collection fees. According to a ruling issued in 1996, in the Federal Register by the Director or the Department of Education, student loan collection costs must be assessed on a per payment basis (not front loaded). This commentary in the rebuttal about assessing 22.5% in collection fees on the 61st day of default is not accurate. A collection cost not exceeding the lesser of the amount charged by the Department of Education or the amount agreed to by the Department of Education may be assessed, but on each payment that is made...not up front. See 34 CFR 682.410(b)6 and follow the trail of citations. Last I checked, the cost rate applicable was less than 22.5%, but the rate fluctuates over the years and it's possible it could have gone up. However, all debtors should understand what the "make whole" rate is. The Make Whole rate is another way of expressing the cost rate. It properly calculates the correct collection cost on a single payment. The Make Whole Rate will always be expressed as a lower percentage number than the collection rate. This is because on a single payment a certain amount is to be applied to principal, interest, and collection costs respectively. If the entire amount was applied to collection costs for instance, this would mean that collection costs were being assessed on collection costs. So, the student loan industry has come up with their own term to simplify calculating the assessment of collection costs. NELA, in the past, once sent a letter to the Washington State Attorney General's office explaining how it assesses collection costs. The letter showed a Collection Cost matrix the reflected a make whole rate that was actually greater than the cost rate. This was total misrepresentation of the truth. It was evidence that NELA regularly overcharged debtors on collection fees. So, the Federal Register ruling that came out in 1996 stated that the Department of Education was going to begin enforcing the ruling effective January 31, 1999. NELA's letter was dated January 31, 1999 apparently coinciding with that date. NELA programmed their computers to assess collection fees to all open accounts with the new (and bogus) formula. This included accounts coded as PD...meaning paid (not in full) principal settled, which refers to certain settled accounts...or I should say accounts they regard as settled. In my case, I paid off my allegedly defaulted student loans through a consolidation loan in 1996, however, it was treated as a settled debt in their system because they overcharged me in their system initially and never reversed the overcharges. So, later, when they upgraded their system and changed the way they assessed fees, my settled account was assessed futher fees. This of course happened to everyone in their system with an open account. Everyone was overcharged collection fees that had an account (voluntarily or otherwise) with them. So, if this debtor had a debt with them, even if it was really in default and not the result of servicing error (or fraud), all collection costs and interest charges can be eliminated in court (but not principal), because student loan companies are subject to state laws (as per federal laws which say they are subject to state law). Washington State RCW's allow all such charges to be suppressed if there has been an instance of misrepresentation by a debt collector. Obviously, misrepresentation of collection fees is a misrepresentation and NELA is in Washington State.
Stephen
Renton,#4Consumer Comment
Thu, July 10, 2008
It's true that when student loans default, the guarantor is required to purchase the loan and collect on it. Furthermore that guarantor may sub contract out the collection of the debt to a 3rd party debt collector. In this case, the debtor admits the student loans defaulted, but does not make clear whether NELA is the guarantor or the debt although it's clear Pioneer is trying to collect on something. I'm not sure what role this allegedly falsified student loan application plays into this. One thing though is absolutely certain. Student loan Guarantors such as NELA and their 3rd party debt collectors do not get to front load collection fees. According to a ruling issued in 1996, in the Federal Register by the Director or the Department of Education, student loan collection costs must be assessed on a per payment basis (not front loaded). This commentary in the rebuttal about assessing 22.5% in collection fees on the 61st day of default is not accurate. A collection cost not exceeding the lesser of the amount charged by the Department of Education or the amount agreed to by the Department of Education may be assessed, but on each payment that is made...not up front. See 34 CFR 682.410(b)6 and follow the trail of citations. Last I checked, the cost rate applicable was less than 22.5%, but the rate fluctuates over the years and it's possible it could have gone up. However, all debtors should understand what the "make whole" rate is. The Make Whole rate is another way of expressing the cost rate. It properly calculates the correct collection cost on a single payment. The Make Whole Rate will always be expressed as a lower percentage number than the collection rate. This is because on a single payment a certain amount is to be applied to principal, interest, and collection costs respectively. If the entire amount was applied to collection costs for instance, this would mean that collection costs were being assessed on collection costs. So, the student loan industry has come up with their own term to simplify calculating the assessment of collection costs. NELA, in the past, once sent a letter to the Washington State Attorney General's office explaining how it assesses collection costs. The letter showed a Collection Cost matrix the reflected a make whole rate that was actually greater than the cost rate. This was total misrepresentation of the truth. It was evidence that NELA regularly overcharged debtors on collection fees. So, the Federal Register ruling that came out in 1996 stated that the Department of Education was going to begin enforcing the ruling effective January 31, 1999. NELA's letter was dated January 31, 1999 apparently coinciding with that date. NELA programmed their computers to assess collection fees to all open accounts with the new (and bogus) formula. This included accounts coded as PD...meaning paid (not in full) principal settled, which refers to certain settled accounts...or I should say accounts they regard as settled. In my case, I paid off my allegedly defaulted student loans through a consolidation loan in 1996, however, it was treated as a settled debt in their system because they overcharged me in their system initially and never reversed the overcharges. So, later, when they upgraded their system and changed the way they assessed fees, my settled account was assessed futher fees. This of course happened to everyone in their system with an open account. Everyone was overcharged collection fees that had an account (voluntarily or otherwise) with them. So, if this debtor had a debt with them, even if it was really in default and not the result of servicing error (or fraud), all collection costs and interest charges can be eliminated in court (but not principal), because student loan companies are subject to state laws (as per federal laws which say they are subject to state law). Washington State RCW's allow all such charges to be suppressed if there has been an instance of misrepresentation by a debt collector. Obviously, misrepresentation of collection fees is a misrepresentation and NELA is in Washington State.
Stephen
Renton,#5Consumer Comment
Thu, July 10, 2008
It's true that when student loans default, the guarantor is required to purchase the loan and collect on it. Furthermore that guarantor may sub contract out the collection of the debt to a 3rd party debt collector. In this case, the debtor admits the student loans defaulted, but does not make clear whether NELA is the guarantor or the debt although it's clear Pioneer is trying to collect on something. I'm not sure what role this allegedly falsified student loan application plays into this. One thing though is absolutely certain. Student loan Guarantors such as NELA and their 3rd party debt collectors do not get to front load collection fees. According to a ruling issued in 1996, in the Federal Register by the Director or the Department of Education, student loan collection costs must be assessed on a per payment basis (not front loaded). This commentary in the rebuttal about assessing 22.5% in collection fees on the 61st day of default is not accurate. A collection cost not exceeding the lesser of the amount charged by the Department of Education or the amount agreed to by the Department of Education may be assessed, but on each payment that is made...not up front. See 34 CFR 682.410(b)6 and follow the trail of citations. Last I checked, the cost rate applicable was less than 22.5%, but the rate fluctuates over the years and it's possible it could have gone up. However, all debtors should understand what the "make whole" rate is. The Make Whole rate is another way of expressing the cost rate. It properly calculates the correct collection cost on a single payment. The Make Whole Rate will always be expressed as a lower percentage number than the collection rate. This is because on a single payment a certain amount is to be applied to principal, interest, and collection costs respectively. If the entire amount was applied to collection costs for instance, this would mean that collection costs were being assessed on collection costs. So, the student loan industry has come up with their own term to simplify calculating the assessment of collection costs. NELA, in the past, once sent a letter to the Washington State Attorney General's office explaining how it assesses collection costs. The letter showed a Collection Cost matrix the reflected a make whole rate that was actually greater than the cost rate. This was total misrepresentation of the truth. It was evidence that NELA regularly overcharged debtors on collection fees. So, the Federal Register ruling that came out in 1996 stated that the Department of Education was going to begin enforcing the ruling effective January 31, 1999. NELA's letter was dated January 31, 1999 apparently coinciding with that date. NELA programmed their computers to assess collection fees to all open accounts with the new (and bogus) formula. This included accounts coded as PD...meaning paid (not in full) principal settled, which refers to certain settled accounts...or I should say accounts they regard as settled. In my case, I paid off my allegedly defaulted student loans through a consolidation loan in 1996, however, it was treated as a settled debt in their system because they overcharged me in their system initially and never reversed the overcharges. So, later, when they upgraded their system and changed the way they assessed fees, my settled account was assessed futher fees. This of course happened to everyone in their system with an open account. Everyone was overcharged collection fees that had an account (voluntarily or otherwise) with them. So, if this debtor had a debt with them, even if it was really in default and not the result of servicing error (or fraud), all collection costs and interest charges can be eliminated in court (but not principal), because student loan companies are subject to state laws (as per federal laws which say they are subject to state law). Washington State RCW's allow all such charges to be suppressed if there has been an instance of misrepresentation by a debt collector. Obviously, misrepresentation of collection fees is a misrepresentation and NELA is in Washington State.
Stephen
Renton,#6Consumer Comment
Thu, July 10, 2008
It's true that when student loans default, the guarantor is required to purchase the loan and collect on it. Furthermore that guarantor may sub contract out the collection of the debt to a 3rd party debt collector. In this case, the debtor admits the student loans defaulted, but does not make clear whether NELA is the guarantor or the debt although it's clear Pioneer is trying to collect on something. I'm not sure what role this allegedly falsified student loan application plays into this. One thing though is absolutely certain. Student loan Guarantors such as NELA and their 3rd party debt collectors do not get to front load collection fees. According to a ruling issued in 1996, in the Federal Register by the Director or the Department of Education, student loan collection costs must be assessed on a per payment basis (not front loaded). This commentary in the rebuttal about assessing 22.5% in collection fees on the 61st day of default is not accurate. A collection cost not exceeding the lesser of the amount charged by the Department of Education or the amount agreed to by the Department of Education may be assessed, but on each payment that is made...not up front. See 34 CFR 682.410(b)6 and follow the trail of citations. Last I checked, the cost rate applicable was less than 22.5%, but the rate fluctuates over the years and it's possible it could have gone up. However, all debtors should understand what the "make whole" rate is. The Make Whole rate is another way of expressing the cost rate. It properly calculates the correct collection cost on a single payment. The Make Whole Rate will always be expressed as a lower percentage number than the collection rate. This is because on a single payment a certain amount is to be applied to principal, interest, and collection costs respectively. If the entire amount was applied to collection costs for instance, this would mean that collection costs were being assessed on collection costs. So, the student loan industry has come up with their own term to simplify calculating the assessment of collection costs. NELA, in the past, once sent a letter to the Washington State Attorney General's office explaining how it assesses collection costs. The letter showed a Collection Cost matrix the reflected a make whole rate that was actually greater than the cost rate. This was total misrepresentation of the truth. It was evidence that NELA regularly overcharged debtors on collection fees. So, the Federal Register ruling that came out in 1996 stated that the Department of Education was going to begin enforcing the ruling effective January 31, 1999. NELA's letter was dated January 31, 1999 apparently coinciding with that date. NELA programmed their computers to assess collection fees to all open accounts with the new (and bogus) formula. This included accounts coded as PD...meaning paid (not in full) principal settled, which refers to certain settled accounts...or I should say accounts they regard as settled. In my case, I paid off my allegedly defaulted student loans through a consolidation loan in 1996, however, it was treated as a settled debt in their system because they overcharged me in their system initially and never reversed the overcharges. So, later, when they upgraded their system and changed the way they assessed fees, my settled account was assessed futher fees. This of course happened to everyone in their system with an open account. Everyone was overcharged collection fees that had an account (voluntarily or otherwise) with them. So, if this debtor had a debt with them, even if it was really in default and not the result of servicing error (or fraud), all collection costs and interest charges can be eliminated in court (but not principal), because student loan companies are subject to state laws (as per federal laws which say they are subject to state law). Washington State RCW's allow all such charges to be suppressed if there has been an instance of misrepresentation by a debt collector. Obviously, misrepresentation of collection fees is a misrepresentation and NELA is in Washington State.
Heather
Warsaw,#7UPDATE EX-employee responds
Fri, September 07, 2007
Okay first of all, student loans are government backed. You can be garnished for them and they can also seize your taxes. If all else fails and the Department of Education surrogates the loans, they can place judgments against you and your asset. You collect interest daily rather than annually while you are in default. On your 61st day of being in default your account is assessed at 22.5 percent penalty. When you buy a car and don't pay on it, they take the car, correct? Well, you can not take away an education, so they penalize you. Second of all, even though your loans may have been consolidated with direct loans, the government still has a claim on them. When they're in a defaulted status, they send them to one of the companies Sallie Mae owns (GRC or PCR, etc.). With high balance accounts Pioneer does submit an online application for you. NOT trying to commit a fraud, but to speed up the process to get you out of default. No WDF applications will go through at Direct Loans without YOUR original signature.