My Student Loans are Almost 30 Years Old. - Dan

Dear Steve,

I have a student loan for $2,500 and one for $1,250. Somehow my records show my original principal was over $8,000.

I requested all info to prove this amount. They sent copies of the only two loans I had which showed the amounts I stated of $2,500 and $1,250. They didn't explain a thing. These loans were taken out in 1985 and 1987. 28 and 26 years ago. They are not on my credit reports but they have taken tax refunds in the past.

My question is how can I get some type of settlement or even a one lump sum payoff without them trying to take my tax refunds. I have 4 years of tax refunds due me of about 12,000 from federal and state combined. I am looking for a payoff and plan to pay with my refunds but I don't want them to just take my refunds without some type of offer. What can I do?


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Dear Dan,

There are a couple of issues that jump out at me. The first, you are owed for four years of federal and state tax returns? Have you not been filing each year?

The best way to avoid having tax refunds intercepted is to make sure you are not using your tax withholding as a savings account. The goal is to break even at the end of the tax year, not have more taken out than necessary.

A $12,000 refund over 48 months tells me you had $250 more per month taken out of your pay than you needed to. That's money you could have put to better use each month. I would strongly consider adjusting your withholdings to put more money in your pocket each month and avoid tax set asides.

Second, on the student loans I agree it is not at all clear what is going on. If you feel the debts requested to be paid are not correct then you are entitled to ask the collector to verify the facts. You can use the sample letter in this post.

But in order to get some clarity I would suggest you also file a student loan complaint with the Consumer Financial Protection Bureau, here.

Once you get the facts about the loans and if they are federal or private loans, then we can implement a plan to deal with the remaining debt. There are options.

So once you gather all this information, please reach out to me again and reference this post.

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