News10NBC Investigates: A family pays more in interest than the original value of the student loan
ROCHESTER, N.Y. – News10NBC has a warning for parents and college students considering a private student loan to cover semesters at school.
Ten years after a local family signed a loan agreement, they told us they’re facing a bill that is larger than the original loan and a crazy interest payment.
In March, Tom and Audrey Stanton of Greece helped their daughter make one of her student loan payments. As co-signers, they could look at the status of the loan. It was originally a Citi Bank loan. Now discover owns the debt.
“I looked at the numbers and they didn’t make sense to me,” said Tom.
The loan covered semesters for one their daughters at Nazareth college. The loan was signed in 2009. The first payment was 2014.
“And now 10 years later after paying 10 years on the loan, the buyout is more than the loan. $14,385,” said Tom. The original loan was $10,193.
Not only is the buyout amount larger than the original loan, the Stanton’s say the statement shows they’ve paid more in interest than the total amount of the loan.
“The interest as of today, March 31, 2023 is $15,963.04,” Tom said. “It’s not funny okay? I can laugh but it’s not funny, okay?”
“It breaks my heart. Why? Because just knowing the background of student loans, just loans period,” said Stacey Walker.
Walker is a loan counselor at Consumer Credit Counseling Service of Rochester. She says she hasn’t heard about a loan debt problem this severe.
Brean: “What can parents and students do they don’t face this kind of situation or at least less likely to face it?”
Stacey Walker, CCCS Rochester: “Always ask questions up front before you actually sign on that dotted line. How can I avoid this in the future of making sure I’m paying enough of the principal balance and not towards the interest? Because it sounds like with this particular case, they were given, all the money was going towards the interest.”
The minimum loan payment for the Stanton’s and their daughter in April is $218. Only $38 goes to the principal – the money that was borrowed. $180 goes to interest.
“I just don’t understand how the banks can get away with all of this,” Audrey said. “It just blows my mind. And how many hundreds of thousands of kids are going through the same thing?”
The question is: how can a family pay more in interest than the loan?
At 5:14pm Thursday, Discover emailed me to say they can’t answer any questions about loans.
I told them they could have sent that answer after my first email on March 31st. Or my second email on April 4th. Or my third email and phone call on April 14th.
I also told them their customer service rep would not or could not answer the question when they talked to Tom Stanton today.
What Stanton says they did tell him is that while the first payment on the loan wasn’t due until after graduation, the interest started accruing the moment they signed the loan.
Discover asks the Stanton’s for 10 days to investigate their loan, which is what they told them three weeks ago.