Sallie Mae – Student Loans - is the biggest bundled SCAM!!!
Sallie Mae’s loan products and their lending are not fully transparent and they are scams. I used them to acquire student loans for higher education and their application was mixed with private and public loans. The reasonable borrower would not normally understand. And upon graduation, I consolidated my loans, serviced by Sallie Mae’s many subsidiaries. And after forebearance wore off, I was forced to default. They apparently “de-consolidated” the loans without notice to me, and they had sold parts of the loans to NYS Higher Education, a guaranteeing government entity. Worse, sometime later, I contacted Sallie Mae, my original lender, reviewed their original lending agreements, and they settled the debt with me based on the original loan documents, without ever disclosing that that they had sold parts of the loans.
I found out later that Sallie Mae was not authorized to settle all the debt and they had an obligation to disclose this to me, and also NYS.
Private companies like Sallie Mae and the government have a relationship that is tied to each others' economic benefit. Sallie Mae’s public portion is backstopped by government. And in return, government entities hire the private company subsidiaries, like General Revenue Corp (Sallie Mae subsidiary) to collect on defaults and tags the collection fees and interests. The longer the default is dragged out and higher the collection fees, NYS basically gives money back to Sallie Mae by way of their subsidiary. They share in the profits. It's in the best interest of the two entities to keep the borrower in perpetual debt.
For example, the person who wants to settle their debts can’t b/c it’s not economically in the best interest of Sallie Mae or NYS. Government has a program called Rehabilitation Loan program. It works like this. You owe $10. You default on the $10 plus interest, collection costs (which is "unearned" income to the lender) which is for this example, total $40. The Rehabilitation loan program says you can “rehabilitate" yourself and get to a good credit by signing on a new loan agreement, with principle starting at $40 instead of the original $10.By signing on this government proposed document, you are agreeing to the principle starting debt of $40, instead of $10 without ever examining the accounting, or whatsoever. I asked for documents supporting their calculations and they refused to deliver it. They have internal records which are ill-kept and can be ridden with mistakes (similar to what the mortage and foreclosure is like). By signing, the borrower now has to pay interest on the $40 starting for lifetime. And you can never default. The likelihood of default for a debt that is starting at a high principle is contravention to "rehabilitation". So if you have $50K loan with $20K interest, collections, etc., your repayment obligation starts at $70K. Over course of 30 years, that’s usually double. How is this rehabilitating or is it government sucking money from you and then to top it off, you have to pay income tax?
DO NOT SIGN FEDERAL REHABILITATION LOAN PROGRAM! REVIEW AND ASK YOUR RIGHTS. This applies to every government backed loan program.
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