How a $1,250 student loan becomes thousands more

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    Jeffrey Worth


    The paperwork hit Detroit’s federal courthouse on Jan. 2. The Macomb Township woman hadn’t made payments on her student loan and Uncle Sam wanted his money back.

    The court, the suit argued, should step in and force the woman to pay up, either by cutting a check directly or letting the government garnish her wages and bank accounts for the cash.

    On Tuesday, after a process server had served a copy of the lawsuit on the woman but she failed to respond, a judge granted the federal government’s request and entered a default judgment against her.

    At stake? A $1,250 loan the woman took out in November 1986, plus interest, totaling $4,055.23. But that’s not all she’s on the hook for — she also owes for the fees the private attorney who filed the suit on the behalf of the federal government, a $400 fee for filing the suit in federal court and interest on that judgment until she pays up, either with a check or through wage garnishment.

    View the rest of the story here

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