The past few months I have been consolidating my Federal Student Loans. With well over 100k worth of this debt, I’ve been very careful to make sure that this new consolidated loan would still be eligible for Income Based Repayment and Public Service Loan Forgiveness. At this point I could probably dedicate an entire blog entry to the hold music of my various services. (Don’t worry, I’m not that desperate for ideas).
After doing everything I possible could to make sure that my consolidation went flawlessly, I was very happy with the initial results. After less than two weeks, I received a letter saying my loans would be consolidated in 15 days unless I called to stop the process. This is the last warning because once your student loans are consolidated, there is no “unconsolidation”.
After waiting about two weeks I anxiously logged on to myfedloan.com to see the status of my loan. Sure enough my new loans were there (one subsidized, one unsubsidized… I’m still not sure why these are separate). However, much to my dismay, all my old loans were still there as well. As you can imagine, I was pretty shocked to see that my student loan debt had effectively doubled.
I immediately called myfedloan to find out what the problem was. I was fairly confident it was just a matter of updating their records but given how much money it said I owed them, I was not going to wait around. My conversation with them only made me more nervous.
When I called I calmly explained that I had just consolidated my loans and that their wesite indicated I owed for both the new consolidated loans AND the old loans that were included. The lady on the phone was not the least bit surprised to hear this information.
Our exchange went something like this:
Me: Your website shows I owe the double the debt.
myfedloan: Yeah, that happens
Me: Can you pease fix it? I don’t want you guys reporting to the credit agencies that I owe double.
myfedloan: Well we don’t actually know that they are seperate. YOu will have to call direct loan consolidation and ask them to fix it.
Me: What happened that would explain my debt showing up double?
myfedloan: Well sometimes they just tell us you have the new loan but they forget to py off the old ones.
Me: They What? How often does this happen?
myfedloan: Oh, probably 1 or 2 in 50.
I have no idea how accurate her statistic was, but I was quite concerned. After asking a series of further questions and not getting any help whatsoever, I realized that this call would no longer be productive. I thanked her for her help and proceeded to call Direct Loan.
After being on hold with the Direct Loan people for about a decade (possibly an exaggeration), I finally got to investigate my newly doubled debt. I explained my situation to the direct loan person and she told me “they should have gotten a check from us.” I said I agree, they SHOULD have gotten a check, but they claim to not have received one. She then told me that there was nothing she could do and that I should take up the issue with myfedloan. I explained that myfedloan told me this was a direct loan issue and they couldn’t fix t. I asked if they could communicate with each other, and was told that this was never going to happen.
At this point I asked if I could speak with a manager. When I was transfered and had explained my situation for the third time, the manager said that he would “file a report” and it would be investigated. This sounded inadequate to me so I continued to ask questions regarding: the purpose of “filing a report”, when I could expect results, and other reasons that could explain this issue.
Then, after well over an hour on the phone with three different people he said, “It’s possible the check hasn’t cleared yet. Sometimes it can take longer than usual.” Sure enough, two days later, when I logged into myfedloan, all was right with my consolidation.
The Moral of the Story
Consolidation can be very poorly organized. Sometimes double debt shows up, sometimes its because a check hasn’t cleared, and sometimes its because “they forgot to mail it.” This process can be a mess and there is plenty of room for error. Thousands of your dollars on are the line, so pay close attention each and every step of the way.