You’re 100% right.
I had loans back in the day. For some reason I ended up with 2 loan payments after I graduated. Consolidated them with the Dept of Ed, then took advantage of an offer from a private company. All was good. Then the Dept of Ed came back at me with a lower interest rate, so I went back to them. Paying everything on time. At that time, they sent out paper bills, every month. On the bill was a box that, if checked, would allow you to pay down your principal. At the time I was sending anywhere from $600-800 a month(total), of which, around $150 was the actual payment. I would check the box, expecting the additional $450-650 to go toward my principal. The next month I would get a statement that would say that my account was paid up for the next few months. I’d call and ask why the extra didn’t go toward the principal. This happened a few more times, my account was paid up for over a year, by the time I went to a private company and paid them off.
Point being, you’re exactly right about them being predatory lenders. Just like the shady mortgage people back in the day, that would give you anything you wanted. The Feds will loan you anything you want. But, unlike the mortgage industry, the Feds have the full weight of the government to find you and get their money.
Sorry you got stuck with that mess. The only differences between the loaning industry and the federal government is the loaning industry works fast with capital recovery as they need to work on a higher volume, and the feds have got forever to get you and they take their time to allow the interest rates to hammer you into submission. Then they can reach so much interest into your loan that they can afford to take a payoff as their bill was already paid earlier as the loan rose in cost. And this way they don’t have to get into a public fight that can make them look the predators they are.
They did the same thing with the housing debacle. And you can do this with IRS back taxes as it is rent free money for them.
rwood