Despite mounting student loan debt in the country, it is still one of those things that can’t be discharged via bankruptcy. But that hasn’t stopped scores of borrowers from defaulting on their loans, which has apparently started to cause a reaction by the United States government.
According to a report in the Northern California Record, the U.S. government has taken a student loan borrower to court because he allegedly defaulted on his loans. Citing a complaint filed on Jan. 18 in the U.S. District Court for the Central District of California, the Northern California Record reported Hyon S. Kim, a Los Angeles resident, was sued over failing to settle his student loan debt with the government.
According to the complaint, Kim blew off paying the principal amount he owed plus the interest that accrued on the loan. The plaintiff, the U.S. Government, wants around $2.4 million plus interest of roughly $2.9 million. The government is even tacking on 3.54 percent in additional interest which accrues at a rate of 23 cents each day. The defendant is also on tap for the legal fees and other relief the court deems the government is owed.
While there isn’t often stories of the government suing student loan borrowers, it’s not unheard of and is perfectly legal to do. After all, filing a lawsuit is the most common way private lenders get their money back after a collection agency fails.
For student loan borrowers who are being sued by the government, the last thing they should do is ignore the action. There is a slew of programs designed to help struggling borrowers and prevent them from defaulting, including income-driven repayment plans and student loan forgiveness programs. If the borrower ignores the lawsuit, he or she can end up owing a lot more, such as the case is with Kim.
For the government, going after all student loan borrowers who default would keep them pretty busy, given that 11.3 percent of all borrowers default on their loans. It should be noted, however, that this number is slightly down from the 11.8 percent rate in 2015. The default numbers are based on student loan borrowers who started repaying their loans as of Oct. 1, 2013. According to the data, in October of 2013 5.2 million borrowers began paying off their loans with 593,182 of those borrowers defaulting.
Author: Donna Fuscaldo
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