A student loan borrower in Palm Beach, Florida is being sued by the U.S. government for defaulting on a federal student loan.
According to a report in the Florida Record, the lawsuit was filed last week in the U.S. District Court for the Southern District of Florida. The government contends that D. Adams, who also goes by D. Biggs, didn’t pay back the principal amount and interest on his loan. The government is seeking the principal amount of $2,686.17 as well as interest payments of $5,627.51. The government also wants the defendant to cover all legal fees and any other relief that the court determines is owed to the U.S. government.
While it’s rare for the government to sue a student loan borrower for not paying back his or her debt, it does happen from time to time. Earlier this year, the Northern California Record reported another case in Northern California where Hyon S. Kim, a Los Angeles resident, was sued over failing to settle his student loan debt with the government. In that case, the government also contended that Kim didn’t pay the principal amount he owed plus the interest that accrued on the loan.
It’s a similar story compared to the Florida case. From Hyon Kim, the government wanted about $2,378 plus $2,866 in interest. Also, the government is tacking on 3.54 percent in additional interest per annum which accrues at a rate of 23 cents a day.
While it is perfectly legal for the government to sue defaulting student loan borrowers through the court system, it would be tough to go after every borrower. After all, 11.8% of student borrowers who started repaying their loans as of Oct. 1, 2013 have defaulted already. Needless to say, the government and courts would be pretty busy if they opted to use the legal system to retrieve all of the funds from defaulted loans.
Interestingly enough, these student debt cases are materializing in some of the more unlikely states. In the state of Florida, the average student loan debt for recent graduates stands at $24,174 which is lower than the national average of $28,400. Furthermore, the default rate stands at 6.73 percent with 56 percent of recent graduates in the state holding at least one loan, both below their respective national averages.
In California, it’s a similar story. The average student debt per borrower from the Class of 2015 was $22,728, roughly $6,000 shy of the national average. The default rate is lower than average at 3.67% while the proportion of graduates with debt is right on the national mark at 59%.
Author: Donna Fuscaldo
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