October 19, 2017
My wife finished grad school about 8 years ago from a private university, in which she took out significant student loans to pay for. We have been paying extra on her loans in order to pay them off faster. Recently, I discovered that my wife, over the life of her loans, has had about $54,000 in interest capitalize! Since the time she had to start repaying her loans, she has never missed a payment. However, it seems like that payment was never enough to pay off the interest that had been/was accruing and so it eventually capitalized. She had Stafford loans, both subsidized and unsubsidized and Graduate Plus. Last year, she consolidated all her loans though.
Question: Is there anything I can do about getting rid of the capitalized interest and not have to pay it? She says she was never made aware of the capitalized interest issue but I imagine somewhere in the fine print of whatever she signed back then it stated that interest may eventually be capitalized. Any advice? Anything I can do?
May 3, 2014
Do you think there was an issue where it was calculated wrong?
If you are looking for a way to retroactively reduce or eliminate capitalized interest, I’m not aware of any way of accomplishing that.
October 19, 2017
I have no idea if it was calculated wrong and am not quite sure the best way of figuring that out, given the records that I have. She consolidated with Navient last year and I see throughout the years interest capitalized on various dates dating back to the year 2000. She went to undergrad from like 1999-2004 I think and then grad school from 2006-2009. I guess I should just call Navient and ask them to inquire into how it was calculated, etc. ???? Are you aware of situations where capitalized interest was calculated incorrectly???
Appreciate your help
May 3, 2014
I would definitely suggest calling Navient and having them talk you through the calculations. I’d also ask them to send you their records of interest calculations so you can review them closely.
As for whether or not I’ve seen a capitalized interest calculation done incorrectly, personally, I have not. However, I’m currently reading over the Ombudsman report from the CFPB regarding student debt. According to this report, borrower complaints to the CFPB have lead to over $750 million being returned to borrowers. Obviously the returned funds can be attributed to any number of issues, but I think it is safe to say that you can’t just assume your loan servicer is right.
If you are interested the full report is here: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/cfpb_annual-report_student-loan-ombudsman_2017.pdf
Sometime tomorrow I’ll be posting an article highlighting some of the important findings.
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