A lesson in student loan torture
BY STEPHANIE ZIMMERMANN firstname.lastname@example.org September 14, 2012 10:24AM
THE FIXER HAS SAVED YOU
Updated: October 15, 2012 9:56AM
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, Chicago
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! Apparently, yours wasn’t the only loan amount that went haywire in a consolidation, as recent Internet complaints attest.
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 not take 30 days to respond, as they can) and that refinance rates for your mortgage will stay low.
In a few months, we suggest you get your free credit reports from annualcreditreport.com just to make sure everything looks OK.
Free report — not score
Dear Fixer: I tried to get my credit score from TransUnion through the website you suggested. The last question they asked was for my credit card info and I could not proceed without it.
Dear Chuck: The official website for free credit reports, annualcreditreport.com, gives consumers free access to their TransUnion, Equifax and Experian reports once every 12 months. It’s useful for making sure there’s nothing incorrect on your report. But it won’t give you your FICO or other proprietary credit score. For that, you’ll have to pay.
On a side note — if you’re ever denied credit based on a bad credit score, the lender must, under federal law, show you your score.
Shred it and forget it
Protect yourself from identity thieves by shredding your old, unwanted personal and financial documents at a free shredding event from 9 a.m. to 2 p.m. Saturday at West Suburban Bank, 8001 S. Cass Ave., Darien. They’ll also accept electronics for safe recycling. For details, check out chicagoshreds.com.