My Student Loan Consolidation Issues – Part II

Michael Lux Blog, Consolidation, Lower Payments, Student Loans 17 Comments

For a brief period of time, I thought I had addressed all of my consolidation issues.  My many smaller loans were all paid and I was left with one big giant loan at myfedloan.  Then the letter came.  I was informed that I had one month until my first bill of over $2,000.00 was due!  In retrospect, when I saw that bill, I should have just done my best to remain calm.  Instead, I felt my heart race, I panicked, and I feared that I didn’t qualify for Income Based Repayment (IBR).  Goodbye house!  Goodbye good credit!  Goodbye life as I knew it!  I began to contemplate how long I could live on ramen noodles alone.

Figuring Out the Issues

I immediately called myfedloan hoping that there was an error.  Instead of the one simple error I hoped for, I got several complicated errors.  I learned that this bill was sent prior to my repayment plan application being processed.  I was told my Income Contingent Repayment (ICR) Plan had been processed and I would owe about $300 a month.  I said that is way better than $2000 a month, but why do you keep calling it ICR?  I applied to IBR.

The friendly customer service representative told me “they are pretty much the same thing, its just a different name based upon the loans that went in.”  I politely replied, “they are both based on income, but IBR has far better terms, and I am qualified for IBR.  Furthermore, IBR is exactly what I applied for.”

I was told that their records indicated I applied for ICR and not IBR.  Knowing this mistake would cost me hundreds each month, I asked for a copy of their records.  I was informed that they didn’t have the actual paperwork, just the results.  I said, “this has to be a mistake.  How can we get this fixed?”  I was informed that it would take a couple months to get the new plan processed.  Realizing this call was not going anywhere productive, I thanked the girl on the phone for her time and went about locating proof I applied for IBR.

I visited the direct loan consolidation website because I applied for IBR as part of my loan consolidation.  I was able to locate copies of all of my application materials and sure enough, there was my IBR application.  As a side note, I should point out that the application had forms for both IBR and ICR.  There were some questions common to both, and some for each specific program.  I clearly answered all the IBR questions and left all the ICR specific questions blank.  With this proof, I was confident that there was a data entry error on their end.

Proving My Case

I called myfedloan again, this time with proof in hand.  The girl I spoke with on the second call was far more knowledgeable than the first.  After about 30 minutes I was able to convince her of my story.  I explained that this issued needed fixed right away because I didn’t want to delay the start of my repayment.  I knew any delay in starting repayment was a delay on getting the coveted Student Loan Forgiveness.  Once she fully grasped my situation, she said she would have to “escalate” my call because she lacked the authority to process my repayment plan change.

Once escalated I spoke with someone very helpful.  She told me that because they did not have the original documents, I would have to resubmit everything, but, if I faxed it to her within the hour, she would process it tonight.  She even said she would call me the second it was complete.  A few hours after a very expensive FedEx Office trip, I received a call stating that my IBR was processed and I didn’t owe them $2000 or even $300.  Success at last!

Some Lessons from My Experience

-> Some customer service people are better than others.  If at first you do not get the results you are after, call back later and hope your luck improves.

-> The squeaky wheel gets the grease.  If there is an issue make noise until it gets fixed (Note: this does not an excuse to be rude or mean, keeping cool is key)

-> Customer service people spend all day on the phone being told they are wrong.  Don’t tell just tell them they are wrong, walk them through your logic and show them something is wrong.  At the risk of sounding like an obnoxious lawyer I say the following: do your homework and be prepared to prove your case.  You need to know what you are talking about, and have the documents to back yourself up.

Has anyone ever had a similar experience with their lender?  How did you get it resolved?