Student Loan Dispute

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  • #67700
    shaunrae006
    Participant

    Okay I thought I was on track until I called my student loan servicer and I have hit a major road block. I have emailed my MC and I am waiting to hear back.

    My current student loan balance is 80k and my salary pay is 69,700.

    I went to a school that practiced deceptive practices and filed a Borrowers Defense claim in 2016 to have 60k in loans dismissed. As of today, the case is still pending and those loans are in forbearance.

    I called Navient and the payment quoted would be $800 a month. They said if I consolidate all my loans it would be $476, but I would have to drop my fraud claim. Which I don’t want to do. The other loans are $124 which I been paying just fine.

    So my questions would be:
    1. Can I provide something to Naca showing the loans are in dispute? They haven’t been due for 3 years. The other student loan balances from a legitimate school have been getting paid.

    2. My only other debt is a car payment for $564. If I do end up going with the consolidation for $476 that would bring my monthly debt up to $1040. Can anyone help me figure what ball park that would be for a mortgage payment if my salary pay is 69,700 a year? My original quote on my action plan was $1500/$275K.

    #67701
    johnsoke
    Participant

    Aw man that sucks. Typically the services would take a % of the remaining balance that is reporting on the cred report . I am an underwriter for another servicer and that is the policy that we do. Hopefully that’s not the case with yours due to the issue .good luck

    #67704
    Nelsont
    Member

    Your personal principles might prevent you from realizing your full buying power. And your car payment seeing as that alone is over 9% of your monthly gross and 9% is the maximum debt you can have to get the most buying power.

    As it stands 1500 should be able to get you a nice house and keep in mind getting the seller to contribute 3-5% toward buy down is not only very common and very easy but could increase your home search from the 270s to the 310s with no money out of your pocket.

    #67724
    TTrumble
    Member

    Hello shaunrae006,

    Based on everything you’ve written, the counselor’s numbers may have been a little generous. If I were the underwriter reviewing the file and saw everything you wrote here (including the consolidation), your maximum payment would be about $1,283, which would translate to about $225,000.

    My personal opinion is that you should not drop the fraud claim, even if it means waiting a while to buy a home. Why would you even consider a consolidation at this point when the amount you are disputing is almost a year’s salary? It would be no different than agreeing to pay an additional $60,000 for a home just so you could get it a few months sooner.

    Only consider the consolidation if you lose the fraud dispute and you are irrevocably saddled with the extra debt. There have been far too many predatory schools and lenders that have helped create our current student loan crisis for you to not fight it anyway. If you keep that debt and wind up paying it back, the cost will be way more than just $60,000 once interest accrues on it during the repayment period. It’s just too big a hit in too many ways for you to simply tolerate it.

    Another thing you may want to take into consideration is that car payment. As Nelsont noted, the car payment alone is more than 9% (9.7%) of your monthly gross income, which is more than your total non-housing debt should be. The consolidated student loans plus the car payment together is almost twice what your max non-housing debt should be (17.9%). More reason to be relentless on the fraud dispute and also give some thought to downgrading or at least refinancing your car to save money.

    I’m not a counselor, so it’s not my place to say whether or not you are ready for homeownership. However, looking at your overall situation, you may want to give some serious consideration to waiting just a little while longer and concentrate for now on improving some things before you engage in the biggest financial transaction of your life.

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

    #72229
    Bravestone
    Participant

    Thanks a lot!

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