FAFSA loans with ridiculous interest - am I stuck with predatory lender?

First, we need to clarify what type of loan you actually have. Is this a Direct Federal loan, a FFEL loan, or a private loan? The fact that your servicer was shut down by the Dept of Education suggests it might be a federal loan, but those interest numbers seem really high for federal loans. If it is federal, you should be eligible to switch servicers. Go to studentaid.gov and check your loan details. You can also apply for income-driven repayment plans that might help reduce your monthly payment. For servicers that were shut down for predatory practices, there are sometimes discharge options available, but it depends on the specific circumstances.

OMG I think we have the same servicer!!! Mine was Granite State Management or something?? My interest is crazy too but not as bad as yours. From what I've heard we're all getting transferred to new servicers automatically but idk when that's happening. Did you get any emails about that?

I work with financial aid applications, and this doesn't sound like a standard federal student loan. The interest rate and payment structure you're describing is more consistent with a private loan or possibly a Parent PLUS loan with an extended term. Federal Direct loans have fixed interest rates that haven't exceeded 7.08% in the last decade. With the original loan amount and payment figures you provided, your effective interest rate appears to be much higher. Here's what you should do: 1. Log into studentaid.gov to see your actual federal loan portfolio 2. Verify if this loan appears there 3. If it does, apply for an income-driven repayment plan immediately 4. If it doesn't show up, you may have a private loan, which has fewer protections The servicer being shut down is relevant - if it was Navient, PHEAA, or Granite State, there may be specific remedies available.

same thing happened to my cousin, she had to file bankruptcy cuz of it. the whole system is rigged!! these lenders prey on kids who dont know any better and then ur stuck forever. good luck!!

This doesn't sound right at all. My federal loans have much lower interest. Are you sure this is a FAFSA loan and not a private loan? Check your original paperwork. Also, have you been in contact with them about this? If your servicer was shut down for being predatory, you might qualify for Borrower Defense to Repayment.

Hey there, I was in a similar situation last year with my FAFSA loan through a problematic servicer. I needed to speak directly with Federal Student Aid representatives but kept hitting the endless hold times and getting disconnected after waiting for hours. I discovered a service called Claimyr that helped me get through to an actual FSA agent without the insane wait. They basically hold your place in line and call you when an agent is available. I was skeptical at first, but it worked really well - check out their demo video here: https://youtu.be/TbC8dZQWYNQ or their website at claimyr.com. The agent I finally spoke with helped me understand my loan structure and transferred me to a new servicer. They also helped me apply for an income-driven repayment plan that dramatically reduced my payments. Definitely worth getting a human on the phone who can actually access your account and explain what's happening.

Financial aid professional here. Based on your numbers and discovering it's a Parent PLUS loan, several things are happening: 1. Parent PLUS loans have higher interest rates than Direct Student loans (7-8.5% range depending on disbursement year) 2. It sounds like your loan experienced negative amortization - where your previous payments weren't covering all interest, causing it to capitalize 3. Servicer transfers don't change your loan terms, unfortunately For solutions: - Apply for an Income-Contingent Repayment plan (the only IDR available for Parent PLUS loans) - Consider consolidation to potentially access better repayment options - Look into Public Service Loan Forgiveness if you work in qualifying employment - Check if your specific servicer is part of any settlement agreements or discharge programs The closure of a predatory servicer doesn't automatically qualify you for discharge, but you may be eligible for certain benefits depending on specific circumstances.

wait so lemme get this straight, the govt shut down your lender for being predatory...but still makes u pay the predatory loan????? wtf kind of system is this??????

UPDATE: Thanks everyone for your helpful responses! I've learned so much. I was able to confirm this is indeed a Parent PLUS loan at 7.9% interest that my mom took out for me, which explains the high interest rate. I've applied for an Income-Contingent Repayment plan and am also looking into consolidation options. I was also able to get through to someone at FSA (thanks for the Claimyr tip, it actually worked!) and they explained that several periods of deferment had caused interest capitalization, which is why the interest growth seems so extreme. They're sending me information about the specific borrower protections available in my situation. I feel much better now that I understand what's going on, even though the situation still isn't great. I'll update again once I hear back about the ICR application!