February 11, 2015
I really need some help!!!
My Niece owes $100,000.00 plus in Student Loan Debt. She has a good job and has made every effort to not only pay her loan payment but to pay a little extra each month to reduce the principal. She contacted Sallie Mae and was told she could do this however it appears what has been happening is that she pays the additional amount and it is not applied to the principal but instead it is held until the payment is due and applied as a regular payment and this has been going on for a while. As a result she has just this past year paid in excess of 10,000.00 in interest and only a mere 2,250.00 approx. was applied to her principal loan amount. At this rate the loan will never be paid off!!! How can these entities get away with this???
My question is it possible to somehow request that Sallie Mae go back and apply those monthly loan payments that were made in addition to her required payment amount and have that money applied to the principal. I assume this would require some sort of account review and what department would be responsible? If anyone (Sherpa) has any advice or specific contact information that would be helpful please let me know…. because as you well know the Customer Service at Sallie Mae is useless!!!
* How can I get prior payments applied correctly so the actual principal is reduced?
* Should I contact the Fair Trade Commission or other such Gov. entity?
* Are you familiar with another such Problem?
* I need to know who to contact or how to get her qualified for the 3 percent Interest Rate Reduction Program?
I am a proud man and would never ask for anything for myself. However, I will not stop until I right this horrific injustice!
I feel I have to intervene in some way in support of my Niece so that she can see some light at the end of this tunnel…. That is not the Train she see’s now!!!
It is a very sad situation when a good, smart individual that has always tried to do everything right is so unjustly punished…..
May 3, 2014
Great questions. I’ll address them in order. I’ll also assume that you are referring to a private student loan. If this is a federal government loan, please let me know as my answers would be somewhat different.
* Next time a payment is made, call your lender and give very specific instructions on how you want the payment applied. Larger than the minimum payments should reduce the principal balance, but it is possible that it also reduces the amount you owe. A few months ago I made what amounted to a triple payment to Sallie Mae. It all went towards my balance, but I did not have a payment due the following two months. I still made my regular payments the following months, even though the bill said I didn’t owe anything. That money reduced my principal balance. Sallie Mae lowers the amount due because they want interest to continue to grow. Interest accumulates every day and the larger your balance, the more you will owe in interest. If you suspect something shady is going on you might want to try filing a CFPB complaint.
* There is a government agency that you can contact. The Consumer Financial Protection Bureau is probably the best bet. Their complaint system has helped out a number of people with their loans. The complaint process can be found here: https://studentloansherpa.com/…..n-company/
* As noted earlier, I am familiar with this lender tactic. While they can lower the amount due, they can’t just hold on to your money and not apply it towards your balance. Even if you niece doesn’t have a monthly payment due, she is probably best served to continue to attack her loan.
* The rate reduction program is designed for people who are struggling to make their monthly payments. If your niece can afford to pay extra, Sallie Mae might not be willing to lower her interest rate. I’ve found that the people in the collections department are most helpful for getting enrolled in the program, but all of their service reps should be able to refer you to someone who can help get signed up for the rate reduction program.
Depending upon your niece’s credit score, total debt, and income; she may want to consider consolidating her loans with another company. The advantage of this route is that it takes the loan out of Sallie Mae’s hands AND she can get a lower interest rate. Reviews of the companies offering this service can be found here: https://studentloansherpa.com/…..n-reviews/
Keep us posted on how it goes and if anything else comes up, feel free to ask.