Sallie Mae: Squeezing out every penny of interest until the very end.

Michael Lux Blog, Student Loans 2 Comments

Life with student loans is full of disappointment.  The constant battle with interest rates and lender nonsense makes it seem like you are stuck in a never-ending battle.  The one exception is the day you pay off one of your student loans.  Instead of heartache, you have triumph and the satisfaction of eliminating a lender from your life… or so I thought.

This week started off very exciting.  I did some budgeting for the month of April and confirmed that this was the month I would be able to pay off my highest interest student loan.  Best yet, Sallie Mae would no longer be a part of my life.  One less bill and one less lender to worry about.

Unfortunately, one does not simply log on to Sallie Mae’s website and payoff their loan.  Instead, you have to call in and wait to speak with a representative.  After waiting on hold for thirty minutes, I was finally able to learn exactly how much it would cost to get Sallie Mae out of my life.  I got a final payoff number, and some interesting information.

Never missing an opportunity

On this site we have previously discussed some of the ways lenders will try to squeeze out every penny possible.  Making your final payment is no exception.

When you call Sallie Mae to ask for your payoff amount, they don’t given you the amount you owe on that exact date.  Instead, they add ten days of interest to the amount that you already owe.  According to their website, this is to allow for mailing time.

This is odd for a couple of reasons.  First, in the year 2015, a large portion of borrowers do most of their banking electronically.  To have them pay 10 days of interest for “mailing time” that will never occur seems strange.  Second, even if the borrower did mail in their final check, 10 days seems like a really long time for a check to arrive.

Perhaps the most frustrating part is that if this check were to take 11 days to arrive, you can be sure Sallie Mae would send a bill for the extra day of interest.

Why pay for future interest on your last payment?

The answer is pretty simple.  Borrowers are not going to complain.  If Sallie Mae wants to squeeze a few extra bucks out of me, there is little I can do to prevent this from happening.  It isn’t worth the time or the effort to put in the fight.  This is my final payment and I just want to be done.

This attitude is exactly what they are counting on.  It isn’t enough money for me to care, but if they do it to enough people, it really adds up.

Not going down without a fight

Between forcing borrowers to make the unnecessary call to customer service (how is it possible that this the final payoff number isn’t on the website?) and then tacking on a few extra days of interest, Sallie Mae effectively squeezes out some extra money out of each borrower.  They certainly don’t make it easy.

While it sucks that these extra steps are necessary, I suspect most borrowers would run through fire to get rid of their student loans.  One last frustrating call to their customer service and some fishy interest calculations will only add to the satisfaction of getting rid of my debt.

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First, congrats on paying off the loan, fishy interest or otherwise! Second, this is interesting — I had one of my loans through SM and was able to get a payoff number on the website and just do it online; I did end up giving them something like an extra $.19 if I recall. It was a Stafford loan, though, not a private loan — does their website handle these in different ways? Anyway: congrats again!

Money Beagle

If you had automated payments scheduled, I wonder what would have happened if you would have sent in the full balance except for maybe $5 or so. Then, I would think the next scheduled automated payment would take out the exact balance to pay off the loan. Of course that’s just my idea of what would logically happen, but I’m sure it’s probably not that easy!