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Feds’ loan arrangements quickly spiral southward
Updated: September 19, 2012 4:14PM
Dear Fixer: I’m at the end of options for dealing with a tremendous inaccuracy in my student loans. If there’s any way that you could help, I would be so grateful.
The short story is that I now owe $68,000 MORE in student loans than I did a few months ago.
The long story is this: Earlier this year, the federal government offered to consolidate any outstanding federal loans under one servicer (FedLoan Servicing in my case). In exchange, I would receive lower interest rates. Great deal, right? No.
In March, I applied for the consolidation to move my $24,198 in federal loans with another servicer in with others that FedLoan Servicing already had. But instead of $24,198 additional loans showing up, $88,957.45 appeared, and there also were other discrepancies. It took about two months of calling every other day before FedLoan Servicing finally admitted that there was a mistake.
I’ve been in contact with both servicers and was told that FedLoan Servicing was sent a refund of $68,405.35 on June 11 to be applied to my account. It has not yet been applied to my account, and FedLoan Servicing claims to not have received it.
In addition, I’ve had to pay the monthly installments on these “fake” loans even though I shouldn’t be responsible for them. Despite the fact that I’ve paid them, FedLoan Servicing sent part of these loans to collection agencies, which caused my credit score to plummet. We can no longer refinance our house because of my poor credit score.
My education is now costing me about $68,000 more because FedLoan Servicing refuses to resolve this issue. Please, please help.
Elizabeth Towle
Dear Elizabeth: We can only imagine your shock in seeing an extra $68K on your loans when you were trying to get on top of your debt to begin with!
The good news is it appears this is finally straightened out. We got this to FedLoan’s PR team, who in turn made sure the head of customer service got on it. Bit by bit, this got corrected: First, the erroneous $68,405 was removed, then you saw that the payments you had made were applied. The correct loan amounts have all appeared in your account, apart from a lingering $2,425 balance that’s still listed with your old servicer but which FedLoan expects to move over once the paperwork goes through.
Keith New, communications director for FedLoan’s parent, said FedLoan also has contacted the three credit reporting bureaus to let them know that none of this was your fault. We’ll keep our fingers crossed that the bureaus make the correction quickly and that refinance rates for your mortgage will stay low.
