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?

  • I’m curious how you could go from owing $2000 per month to less than $300 per month. How much loan was forgiven?

    • At this point none of the loan has been forgiven. The initial $2000 payment was based upon a standard 10 year repayment plan. I switched to a plan based upon my income instead. The downside is that it takes longer to pay off the loan in full. The advantage is that it is eligible for forgiveness after 10 years of public service.

    • stack

      Wow, $2000 a month. At a generous 6% interest rate, that leaves you with a loan balance of around 180K for a loan that could be paid off in 10 years. You’d need a pretty amazing job for paying that off to be easier than 10 years in public service.

  • Excellent post. I especially appreciate the points you make about proving your position without being rude. Keep documentation of everything you do, especially in regards to financial transactions. If it is online, take screen shots of each step. If it is paper documentation and you can’t scan or copy it, take a picture with a camera or smart phone.

    • Thanks for the kind words Betsy! The screen shots are a fantastic idea. We have so much technology at our fingertips, and this information could come in very handy in the future.

  • Sounds like a challenge! I love that you took something from it, though; your learnings are spot on!

    • Thanks! It was very frustrating when it happened, but at the end of the day I thought to myself, “well, at least I will have something interesting to talk about on the website”

      Hopefully my experiences will save some people some money in the future. If it does, then I will have been glad it happened to me.

  • Hey Michael, I’m on IBR as well. Do you know about any loan forgiveness program related to clergies?

    • I’m almost certain that your IBR payments made while you were employed by any church or religious instituion would count towards loan forgiveness. All 501(c)(3) organizations qualify, and though I don’t know if a church is technically a 501(c)(3), this work should certainly count a “public service”. Just give your lender a call and get the paperwork to have your IBR payments certified. Once you make 120 certified payments, your loans should be forgiven. Here is the article I wrote on public service loan forgiveness.

      I’d be very interested in hearing how it goes with getting your payments certified. Please keep me posted!

  • Excellent demonstration of how hard you may have to fight to keep your rights. I’m glad your story turned out successful, but I wonder how many others would have given up before getting resolution? Far too many, I’m afraid.

    • That is a scary thought Melissa, but one that I think is spot on. While I am a huge fan of being polite on the phone, I think its just as important to do your own research and to question what you are told. The people you interact with are human an capable of making mistakes.

  • My graduate school “accidentally” took out an additional $10K in student loans for me. When I told them I didn’t need or want the loans they were unresponsive and told me it was “too late” and they’d already sent the paperwork to the loan company. Let’s just say it was a long and very difficult process that took months (and many many reps) to fix. Since then I’ve been neurotic about documentation and keeping “proof” of all of my finances and financial decisions.

    • That is terrible. I feel like the lenders and colleges are a bit too “chummy” with each other.

      It is too bad that we have to be so meticulous about our documentation, but that is the only way to do it.

  • That’s a tough spot to be in. Sometimes I feel like I’m in a black hole dealing with CSRs at big financial institutions. I am in a tough spot right now where having those sorts of records would make the situation much easier.

    • Keeping all those records can be a pain. Not keeping those records can be an even bigger pain.

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  • Heather Caulfield

    I’m currently in a very similar situation. The difference being my consolidation application was processed wrong and the consolidation of my federal loans included two loans (Perkins Loans) which I specifically wrote in the section to EXCLUDE from consolidation. Importance being that I can apply for 5 years of deferment and eventual forgiveness of my Perkins loans due to my position in health care. All my loans were all typed very nicely with ID numbers and submitted via mail as the online application was not working. I received correspondence in the mail later on with a 10day window (came on day 7 of the 10 day window) to make modifications to the consolidation which was incorrect, and included all of my eligible loans instead of the loans I listed specifically. Being that this would be $2000 of debt I would have to pay and pay interest on, I called that day and spoke with Navient for a few hours to get these incorrect loans removed from my consolidation. They assured me all of the paperwork was submitted and would be immediately processed, that I had nothing to worry about and my consolidation would be correct when it was processed. I got my official loan consolidation information today…. Today I spent 3 hours on the phone talking to Navient and the Federal Student Aid Information Center who both stated the other was the only one who could modify these loans as they were now officially consolidated. I have my original application of which I submitted for the direct consolidation and customer service insists they are looking at my original application and we have two entirely different applications somehow. There’s nothing they can do. My loans are consolidated and there is no solution. This is fraud, my application has been tampered with, I am being forced to pay on loans of which I am providing community health services for and would otherwise be exempt from ever repaying. How does one overcome this? Why doesn’t anyone care when I provide them with original evidence? Where do I need to go to talk to the person who received my paper application in the mail as Navient claims they did, yet they have a different application than I do?