Since I only took out Stafford loans while I was in school, I was able to consolidate almost all my student loans into a single balance through a program called the Federal Family Education Loan Program (FFELP).
After I consolidated, I was able to use a website (which I believe was maintained by the federal government) to track my loan balance and otherwise access my account. Although the interface wasn't very slick, there was lots of information at my fingertips.
My favorite feature of this website was that you could see your specific amortization schedule for every single payment plan offered. This made it very easy to see the total amount of interest you'd pay on each plan.
For graduated plans, you could also see exactly when each increase in payment would occur and by how much your payment would increase. All this information made it much easier to decide which plan would be the best fit for you.
FFELP versus Direct Loans
However, in 2010, FFELP was discontinued and replaced with the Federal Direct loan plan. This was actually a provision of the Health Care and Education Reconciliation Act of 2010 (aka “Obamacare“).
In the FFELP days, private lenders were providing loans to students, though those loans were guaranteed by the federal government. These private lenders received a subsidy for originating the loans.
The Federal Direct loan program was implemented in order to end these subsidies by cutting out the “middle man” and having the U.S. Department of Education loan directly to students. The thought was this would save the government billions of dollars that could then be used to expand the availability of various types of financial aid (mostly Pell Grants).
Recently, the government began transferring the loans to private loan servicers once the federal government had originated/disbursed them. For a list of the current servicers of federal loans, click here.
Is it me, or did the Federal Direct program just reverse things? Under FFELP, loans were originated by a private lender, but if you consolidated then your loan was serviced by the federal government. Under the Federal Direct program, your loans are originated by the federal government, but serviced by a private company. Additionally, many of these are the exact same companies that used to originate loans under FFELP.
The New Interface
The move to private servicers has meant a new web interface. As far as I can tell, all private servicers use an identical interface, so everyone with Federal Direct loans is having the same user experience with their accounts.
Note: I discovered this because although I only have one servicer now for my Federal Direct loan balance, I have accounts at several of the servicers because I'm still in their systems from my loan-origination days under FFELP.
Personally, I am not a fan of the interface associated with Federal Direct loans. It's a lot prettier than the old FFELP interface, but gives a lot less information:
- You cannot see an amortization schedule, although you can see the amounts that went to interest versus principal for payments that you have already made.
- You cannot see what your monthly responsibility would be under each of the plans.
- In the “My Payments” section, there are only two options: 1) request deferment/forbearance, and 2) “lower my payments,” which takes you to a tool that helps you enroll in the Income-Based Repayment plan (IBR).
What if I want to switch to a plan where I am paying more each month? Talking to a representative over the phone or by email, to me, is not nearly as useful as a chart that displays the amortization schedule for all of my options. It is clear from the “My Payments” section that as many people as possible are being pushed towards IBR, which is the highest-interest plan. Is that ethical?
My Monthly Payments
As the federal government farms out the servicing of accounts, they are capping the number of accounts each company services. In August, I received the following email:
As the number of Direct Loans continues to grow, Federal Student Aid has expanded their federal loan servicers to provide additional servicing capacity for the Title IV loans owned by the U.S. Department of Education. This will ensure an efficient and effective multi-servicer, borrower-centric approach to servicing. Please note that it may take up to 10 days before your new servicer has completely loaded your information to their system. Also, please be aware that if you are a borrower that was on the Direct Loan Servicing Center's Kwikpay auto debit program, that this information will be sent to your new servicer. You will shortly be receiving correspondence from your new servicer related to the transfer of your Direct Loan.
The first thing that happened was that my Kwikpay autodebit was not withdrawn on the normal date. However, I couldn't log in to see why, because I had not yet received correspondence from my new servicer with that information.
When I finally was able to log on, I discovered that my Kwikpay auto debit information had not, in fact, been migrated to my new account. I was able to enter all the information and have my August payment made within ten days of my due date.
However, the next month, my auto debit for September also did not go through. When I logged in to see why, my bank account information was all incorrect (not as in “one digit off” — as in “not even close”). How could this be possible when I had entered it only the month before and that payment went through just fine?
I took a deep breath, corrected the information, and made the September (now one-day late) payment on Saturday. The following Tuesday, I was notified that my September Kwikpay auto-debit had gone through. You know, in addition to the September payment I had made manually.
Um, what the heck?!?!
I transferred money from my savings account into my checking account to prevent an overdraft. Then I emailed my servicer to ask whether one of the payments could be applied towards the October payment since the September Kwikpay had been deducted FOUR DAYS AFTER my auto debit was authorized to go through AND after a manual payment had been made which I SPECIFICALLY FLAGGED as the September payment at the time.
As you can guess, crickets.
The system shows that payment as having been applied all to principal, which means it's being treated as an extra payment. Fortunately, due to an emergency fund as well as the fact that I'd paid off my consumer debt and hadn't allocated that toward another savings goal yet, I have the money.
On the one hand, it doesn't matter whether they apply it toward my October payment like I asked or whether my Kwikpay FINALLY goes through correctly next week (I'm waiting with bated breath, believe me). But on the other hand, the correspondence I have received saying they are dedicated to providing exceptional customer service is obviously a little inaccurate. Sigh.
What About You?
Any of you out there have Federal Direct loans? What's your experience been with the new servicers? How do you think it compares to the previous system?
Author: Honey Smith
Honey Smith has been reading GRS since at least 2008, right when she got her first “real†job and started getting serious about finances. She and her husband Jake are in their mid-30s and recently bought a home together. Currently, she manages graduate programs at a large state institution, and he is an attorney at a mid-sized firm.
Between them, they have paid off approximately $30,000 in consumer debt since she started writing for GRS in 2012. However, they still have nearly $200,000 of student loan debt, so she will continue to chronicle their debt-paydown journey. In addition to personal finance, Honey is interested in vegetarianism and cooking, gardening (despite living in the desert and having a black thumb), issues in higher education (including the student loan bubble and the slow death of tenure), and animal rights; however, her heart lies with fantasy novels, trashy TV and Skyrim.
Luckily I haven’t experienced the horror story that you have. My lender’s website is fairly easy to use but didn’t have the amort schedules that you mentioned. I just made it a point to pay off my loans as soon as possible so that I would limit the chances of screw up like you experienced.
That seems to be a feature of anywhere I try the in-house autopay system. If I log on 1-3 days after a payment is due, it’ll show as overdue, but at the same time I can check my bank account and see a pending withdrawal. Then after a few days, the money’s out of my account, and bill is marked as fine.
I think it’s similar to how when I manually pay a bill, it states that payment is effective that day, but it takes a few days for the money transfer to actually go through. Seems to happen to me with everything, student loans, credit cards, ISP.
Oh dear. It’s scary to have evidence of incompetence/negligence/lack of internal communication from companies who have access to your bank accounts and influence over your credit rating. I had a similar experience with an insurance company and wound up switching to another one. I had a 6 month payment autodebited after I canceled, which led to a very angry phone call and the best customer service experience I have EVER had from a lovely Indian woman – don’t knock foreign call centers! But then I was free of them, which is not an option in your case, it sounds like. Good luck at least getting things to a point of stability.
The ‘new’ system was already in place for me when I actively started paying off my debt – so I don’t have much to compare it to.
I agree that I miss the specific month-by-month amortisation payoff plans! But, I can do that myself with a loan payoff calculator – I like the simple one at What’s The Cost (link removed to avoid spam queue, but easily Googleable!).
The thing where a payment disappears from the system for a few days while it’s being processed really confused and frustrated me too, until I figured it out. I still don’t know why it works like that. But, yeah, for some reason the website just loses all record of the payment from about 48hrs before you make it to after it’s taken out of your bank account – meaning I’ve also accidentally double paid a payment!
As I’ve been paying off my loans so far ahead of schedule, I’m not “due” for another payment until 2015. If you pay off ahead of time it won’t automatically take money out any more. I think that might be the equivalent of the higher payment for month plan you’re looking for?
Either way, I agree the website is a bit of a hassle!
I’m assuming at this point that it’ll just be an extra payment I made (which at least all went toward principal) and am assuming they’ll withdraw the regular amount next week.
The thing about the amortization schedule that frustrates me is that since I’m on a graduated plan, I can’t tell how many months I have left at my current payment level, or what the payment will change to once I get bumped up to the next “round.” Surprise!
https://www.acs-education.com/CS/Jsp/general/home.jsp
This is who currently has my loans, and I haven’t had any problems with them. They have a calculator for a couple of different repayment methods under info center.
You might want to watch the “extra payment” though. A lot of times, the extra payment will screw up the autopay, and it will skip a month, and then the month after that you have double the interest to pay. It doesn’t count against you, but less of your payment goes towards prinicple (although you save the extra month that wasn’t charged to you). My site has a way to reset the date of prepayment so that it will go back to billing on the date you set.
Oh man, not knowing the plan specifics sounds horrible. I obsessively recalculate my repayment plan twice a week (“what if I put in $5 more a month? would I be debt free three days earlier?”) so I totally empathize with the need to know exactly what’s going on.
Re whether paying extra early lets you skip the next payment: You need to talk to your servicer to put it on the setting you want. You can choose to have auto-deduct on no matter how much extra you have already paid, or you can choose to have it auto-deduct only if you haven’t already paid enough extra. Either way is in option, but you must tell your servicer if you want them to switch it for you.
My experience is so completely identical that I thought it was my personal story … Right down to the accidental second payment!!!
I was coming to the comment section to say the same thing! Luckily, I’m not too far off from paying everything off (after ten years of payments). I’m sorry that everyone’s going through the same thing, but I’m thrilled that it wasn’t just me :-)
I’m glad we’re not the only ones who had this issue. I just left the second payment on the account, and congratulated myself for making the extra payment (even if it was by accident).
my bank lets me do an autopay through them rather than through the company which might be a good option for you. while you may get the 0.25% interest rate deduction for signing up through the lender, i’m not sure it’s worth risking your credit worthiness over that deduction. especially as i think you’ll pay the loan off early? if it continues, the new cfpb intervenes with lenders and might be worth pursuing.
ACS is literally the spawn of Satan. My husband and I are both on IBR and when it first came out we sent in our applications on July 1. Took them until Oct to process it. Recently he had to redo his paperwork. Had to send it in three times…. And we FAXED it! Claim after claim of non-receipt. They won’t do anything to correct their mistakes. I personally don’t see why you would switch to a higher payment schedule (say if you want to move from extended to standard). Just send in bigger payments.
Also they sent him incorrect documentation that his interest was being added to his loan, etc. ACS is just bad news. Mine loans are serviced by Nelnet and I haven’t had any problems from them.
I had almost the same experience with ACS. I filled out all the IBR paperwork when I applied for my Direct Loan Consolidation and ACS claimed that they received none of it! I had to resubmit the paperwork twice!
You really have to take initiative and be on top of this stuff in order to catch these kinds of screw-ups that the loan servicers make. It’s so difficult to complete even the simplest of tasks that it’s no wonder so many graduates are defaulting on their loans.
I, too, hate ACS. They have no customer service. I have done my business with them through e-mail (they basically tell you not to call unless you want to be on hold for hours) and have been very frustrated by the responses from “customer service” people who have obviously not even read what I wrote. They also will not allow me to make extra payments to principal only. If I send extra above the standard payment, they distribute it how they see fit and I have no control. I’d like to pay mine off early but I’m not sure they would even credit my payments properly. They seem to have a rather arbitrary way of deciding how much of the payment goes to principal and how much to interest, and do not answer questions at all about that process.
That’s weird. I finished paying off my last loan with ACS a few months ago. I always made my payments online and always had the option to pay down principal. You just select how much you want to pay, and then it goes through. However, you MUST pay off all current interest first. For example, if your minimum is $110 to cover $100 of principal and $10 to interest, then when you pay $150, the first $10 goes to interest and then the next $140 goes to principal. If you decide five days after making a payment that you want to pay more, your payment first goes to the five days of interest that have accrued and then again to principal.
I also just finished paying off my loans through ACS. I never had to designate where my payments went – any accrued interest since my last payment was first paid and the rest went to principal. I had absolutely no problems.
I signed up for the auto-withdrawal but made manual online payments twice a month so I never had to deal with the auto-withdrawal. But I’m super crazy so I needed the control aspect of manually making the payments and I also obsessively checked my account after making a payment until I saw it go through. Loved seeing the balance slowly disappearing!
Just paid my loans off last month. $32,000 monkey off my back and it feels awesome.
Now that I see that they apply “extra” payments to principal, I don’t plan to try to go through what I imagine would be an incredible hassle to switch plans. I think your idea of just making extra payments is the way to go.
100% agree with you on ACS. My husband and I both have our loans through them now (just regular, straight up student loans), and they “lost” a payment one month on his loan. The automatic withdrawal left our checking account as usual, but never posted to the account at ACS (and since their user interface is soooo “user friendly”, up till that point, I had just watched our checking account to make sure the withdrawal came out in time and considered it paid…not so anymore; now we watch it like a hawk). So then two weeks after the automatic withdrawal, we got a VERY nasty letter telling us that his loan was overdue and immediately payable etc. It took 3 months to get it straightened out in the end, and during the 2 additional months, every time he’d make a (regularly scheduled) payment (now by check so we had “proof” they’d cashed the payment), they’d credit it to the previous month and send the same stupid “your loan is overdue” letter PLUS charge all sorts of bizzarro fees (like an $83 “reading” fee…we never did get that explained satisfactorily). We literally spent over 30 hours of our lives on the phone getting it all figured out…turned out they had applied the payment to SOMEONE ELSE’S ACCOUNT. Then it was another month of fighting with them to reverse all the fees we incurred thanks to their incompetence. It wasn’t till we invoked the Office of Federal Student Aid and the Consumer Financial Protection Bureau that ACS got their act together and came clean. Holy bananas.
I didn’t have any problems with my student loan (when I had one), but this post really drives home the point that when you’re in debt, the party managing your debt has more control than you do.
I had the same experience with Mohela. They are HORRIBLE!!! They couldn’t get the payments right for a couple of months. I wish the old site would come back!
I’ve had the exact same problem, and trying to contact them is futile. According to their website, I’m signed up for Automatic Withdrawal, but I cannot figure out how to change either the date or amount of the withdrawal.
ditto. The old dl.ed website withdrew money on the correct date and reflected the payment the day it was paid. My former car loans and my current mortgage work that way too. This website is stuck in the stone ages, for some reason.
The new website didn’t even work when they first switched! I couldn’t log in due to overloaded servers, and was afraid they were going to charge me late fees, etc.
My auto debit account information also was wrong. One digit was out of place, and prior to reading this article, I assumed it was a typo on my part. Maybe it wasn’t.
To make matters worse, the wrong account was an active account at my bank, so they were withdrawing someone else’s money to pay for my student loan. It was eventually worked out (at least they reversed the payments and asked me for them, I assume the other person got a refund) and I haven’t had a problem since.
Thankfully I’m on pace to pay this off in less than a year, and these troubles have definitely helped to keep me on that path.
I also have my student loans with Mohlena, I am on the IBR plan, I was young and didn’t realize what I was getting myself into with this student loan debt : (, and when I got married last year they wanted me to pay $780 dollars a month! For 20 years! I told her I cannot make that payment, there is no way, so any way after several phone calls later I reached this lady and she told me to file my taxes seperately from my husband each year and we will not pay anything because of our household size? So I have been doing this and putting money away to cover the tax write off of my loans in 20 years, but still feel like this is a bad decision, but I fought with these people tooth and nail and don’t know what else to do : ( Also, I paid on these loans for 3 years over $300 dollars a month and the lady told me this does not count toward the 20 years, this is all so confusing and I am a busy working mom, any advice anyone has would be great.
Jenn,
I don’t know if I would listen to the servicer about whether or not to file separately. Some cases, like mine, where my wife also has student loans, turn out better if we file jointly. Also, unfortunately, only payments made after entering the IBR plan count towards the 25 years. It’s 25 years for loans made before July 2014.
I hate student loan providers!! And paying extra doesn’t always work smoothly either. I’ve been paying extra on my smallest student loan (all are gov’t sub and unsub) and they keep putting a “paid ahead” status on that laon. This status allows my regular monthly payments ($20.35) for that loan to be redirected to my other loans except they don’t put the entire $20 towards 1 loan they break it up and apply it to 6 different small loans. I have called twice a month for the last 4 months and every person assures me its been taken care of. Its a very frustrating experience as nobody I have talked with in fed loan servicing (my provider) seems to care and every month it happens again.
This is happening to me too. Basically, they are preventing us from targeting high interest rate loans and are simply redistributing the extra payments over all loans, thus increasing the total amount I will owe.
It sucks you’re having a bad experience, and I’m sure you spoke with somebody and explicitly requested any excess payment be made against the current principal balance rather than future payments.
I just want to chime in and point out that interest on student loans is tax deductible; hence, any “overpayment” applied to the principal rather than interest will increase your adjusted gross income. That’s almost trivial though, if you’re not on an “income-driven” repayment plan.
I noticed this alert at the top of my account when I logged in today — not sure if it’s related to your situation:
“Message to borrowers enrolled in Kwikpay (Electronic Debit)
Under Kwikpay, the Direct Loan Servicing Center will now debit your bank account on the first business day after your due date. The Direct Loan Servicing Center will apply the payment to your Direct Loan account with an effective date that is the same as your payment due date. If you access your account via this Web site before both the bank account debit and the Direct Loan account payment application occur, your account may appear to be past due. However, your status will be updated to current as soon as the payment application occurs and will not reflect negatively on your account.”
Sounds possible. Though it doesn’t get rid of my frustration!
I know we live in the Internet age, but most of Honey’s questions and frustrations could have been resolved by picking up the telephone and talking to the new loan servicer before making any new payments. It’s no fun to have to deal with administrative changes, but you are the one with the debt, so it’s on you to stay a few steps ahead of it.
Don’t like it? Then pay off the loans before it gets transferred yet again.
My student loans have been transferred four different times. Each time it happens, I just try to use it as motivation to pay down my loans even faster. So far 77K is paid off, but still a ways to go.
Well, when I went to college, student loans were pretty much unheard of in Bulgaria. (That became part of the reason why so many students went to work in the USA for the summer through WAT programs – they needed some way to pay for college.)
Now student loans are more common, but I don’t think they are regulated very well – they’re pretty much left at the mercy of the banks and are much like the regular consumer credits.
If there’s one thing I want my future kids to know about bank, it’s that THE BANKS ARE NOT YOUR FRIENDS. They are after your money. Avoid banks at all costs if you can.
It’s hard enough to deal with clerical (or other) errors when you’re a client of the bank – i.e. you have a deposit, – but it’s even worse when you are a BEGGAR of the bank, i.e. you have a loan with them.
PS That ad is still up there blocking the first paragraphs of text!!
Hi Rya,
Does it go away when you refresh the page? That seems to work for me.
Bummer! It does work.
(I feel so silly now.)
Thanks, Tom!
I’ve been happy enough with the part where PHEAA/FedLoan Servicing takes my money BUT they are way behind on answering correspondence! I sent a form in May to certify the number of qualifying payments I’ve made under the Public Service Loan Forgiveness program, and they *still* (in October) are “reviewing” my file. Sigh.
I’m with you on the Fed Loan correspondence. I never had any student loans but I started a grad program, and because I’ve been a teacher in a high-needs area I was eligible for $5000 in loan forgiveness (and it had to be a loan…they wouldn’t just pay the tuition as it came due). So I took out $5k in loans, and it’s been the biggest nightmare to get the loan forgiven. Documents having to be sent back and forth repeatedly over errors on their part (like when they calculated time from January 2007-June 2008 as 6 months instead of 18). When they say that they would respond within 10 business days…HA! After 2 weeks they would just show the receipt of the document.
Finally, 7 months after I started the paperwork they said that I had been approved for the loan forgiveness and that that it would be paid off within 30 days. That was 4 months ago, and I’m still waiting. Suffice it to say, I have not been impressed.
A happy update. Inspired by this post, I decided to contact Fedloan again and see what was up with my loan forgiveness. 2 days later…my $5k was applied to the loan, and I paid off the accrued interest this morning. YIPPEE!
That’s amazing! Talk about TGIF :-)
I’m having a lot of trouble reading this article, there’s a strange half-transparent ad blocking a large portion of text. Please fix!
I know, I told them yesterday in the comments. I don’t see a CLOSE button for the ad, either.
JD made his money off this site. Now he’s gone.
Nobody is responding to the complaints about how the site is now unreadable. Either someone doesn’t care, or this is someone’s passive-aggressive way of getting us off the site.
Either way–they win. Someone doesn’t want to take care of the readers, why should we keep giving that person page view$?
There is no ad blocking text on my screen. It could be something unique to your browser or operating system, and makes it harder to troubleshoot.
Readers,
We have run into a couple of issues while doing some site maintenance. We are working to ensure that the page view returns to normal. Thanks for your patience and understanding during our transition. We are fully committed to GRS, though you may not see it in the comment section. :)
Thanks,
Editorial Elf Jen
It matters a lot to see it in the comments section.
You could find a different way of responding to feedback, but you’ve got to find a way. I don’t think readers will take well to being ignored!
Oh yeah. That’s just because they’re monitoring you. They like to follow you around online so they can hold your hand and lead you into more predatory loans.
I consolidated my loans into a Direct Loan because my lender (IDAPP) was screwing up my payments (not allocating my monthly payment to each loan and then sending me non-payment letters). My experience with the Feds was completely fine, but last year I was transferred to Mohela, who are just as incompetent as IDAPP. The website lists options for making a payment and such, but in reality, I have to call them to do anything.
I am shifting the bank account from which my direct debit comes and I dread how much trouble they are going to have with this simple transaction.
I, too, wish the old site would come back. They switched me first to Nelnet, and now I’m with MOHELA. Nelnet was awful. Errors galore, their website was confusing and nearly useless in terms of finding the information I was looking for, and I sent several rather vitriolic emails about the problems I was having and never received a response. MOHELA has been comparatively wonderful, although as you say their site is much less useful and less informative than the old Dept. of Education-run site was.
We had a similar experience, but it was a little worse. My wife had made our last payment to Federal Direct, so her loan was payed off. We then received a notice stating that Federal Direct no longer was carrying her loan. Then an amount was auto debited from our account (even though we had already payed off the loan). Long story short, it took us over 2 months to get this corrected and to get our money back and they refused to pay us a fee or interest, even though they certainly would have charged us. I’m glad to be done with student loans.
The same thing happened to me when I paid off my student loan…17 years ago! The more things change, eh?
Wow – what a nightmare!!!! And it sounds similar to some mortgage servicer horror stories I’ve heard. It’s too bad we can’t pick our loan servicers – that’d give them some incentive to get their acts together!
I could have written this post. My auto debit stopped working (after 4 months), without any changes on my end. Ugh. And of course by the time I was notified, I was considered “late”. I spent one hour on the phone to ensure that I wouldn’t be charged a late fee. Maybe I’m paranoid, but I felt like this occured so that I wouldn’t get the interest rate reduction incentive for 6 months of on-time payments.
A similar thing happened with Sallie Mae, although not at the same time. I called BoA to ensure that the problem wasn’t on their end (it wasn’t- I have a bunch of other auto debits that have gone through successfully for years with no issues). Sallie Mae made sure they let me know I was late, calling me (and my parents, who cosigned on my loan) every 2 hours even after my payment had been made. So irritating, especially since the problem was clearly on their end. After speaking with the customer services reps, I started to get the sense that this happens a lot.
Now I have an alarm on my phone and an appointment on my calendar to remind me to check to make sure that the money has been taken out of my account. This kind of defeats the purpose of the auto debit.
A year or two ago I received notice that my student loan was being moved from one servicer to Sallie Mae. I had consolidated a number of years prior to that and my interest rate was something like 2.7%. When my loan moved to Sallie Mae the interest rate jumped to about 5%. I just about flipped out as I don’t see any way that can be done legally. It’s like having your mortgage sold and it goes up 3%. It’s supposed to be a contract regardless of who is servicing the loan. Anyway, I tried and tried and tried to get someone to address this at Sallie Mae. The balance was about $8,000 and while I did not want to pay it off at 2.7% I was so mad that I did pay it all off. Never did get a response from Sallie Mae about how this could happen.
Were these the old style variable interest rate loans, or the new fixed interest ones?
If it was a newer one, I know that there was a subsidy by the government to cut the interest rates on student loans, but that was alowed to expire earlier this year (rates went from a base of 3.4% to 6.8%).
Any tips on lowering the rate for a private school loan? My gf is at 8.5% and has very good credit. Is 8.5% really the best she can do?
Sorry if this is off topic but her federal rate is much lower and the amount is smaller. She calls the private one the “evil” loan. I thought the decision to go to grad school for a poorly paid field was the biggest issue but what’s done is done. Thanks!
I don’t have any private loans but am pretty sure it’s standard for the interest rates to be much higher. Ugh.
I have had nothing but issues since my loans we transferred from the Direct Loans to the outside servicers they are now using. You used to be able to do pretty much anything online, change your payment plan, apply for a forbearance, check out your different payment options. I am on my second servicer as I am eligible for the PLSF. First one, Aspire, never processed my payment plan change. I have now been switched to FedLoan (PA Higher Education Authority)so we will see how things go.
And don’t get me started about how there was no notice that they are now limiting General Forbearances to three years and you are SOL if you already maxed out…
YES. THIS. I never had a problem with my loan servicing at the former Direct Loans Servicing website. I have set up my “KwikPay” options three times now at my new servicer. The website said everything was good to go – payment wasn’t deducted. Ever. Spent 30 minutes on the phone with them and they told me that next month, things should go through without a problem. (Also that late payments don’t matter… what?) 4 days after my payment was due – no payment deducted. Paid manually and had the same problem the next month.
Right now my account says my loan is in forbearance and I have no idea why, so I’ve been making payments anyway. It’s a total mess and I just can’t risk trusting them. I’ve been making all of my payments through their website manually a few days before the due date. Total pain in the ass.
I also have Federal Direct Loans and have switched over to a new site/loan servicer. I’ve actually been happier with the new site so far, although it takes a couple days to show that my auto-payment has been applied to my account. I haven’t consolidated, and I’m able to log onto the site once or twice a month and make extra payments toward my smallest loan. I’m also on the standard repayment plan, so I haven’t looked into IBR. My understanding is that the government is trying to educate more people about income-based repayment, so maybe there’s more focus on it now than in the past.
I would be really frustrated with the problems you’re having, too! I hope you’re able to resolve everything soon. Now, I’m going to be watching my account closely to make sure payments go through. Thanks for the post.
This makes me so glad to be debt-free. Even though “mathematically it doesn’t make sense” to pay off a relatively low-interest rate loan, the hassle and stress of dealing with it are not worth it.
You truly are a slave to your lender.
I’ve actually been pretty satisfied with the Direct Loans program. I agree that I wish there was more information. The FFELP site sounds awesome!
I read that one of the problems with DOEd taking over the loans is the high rate of defaults. Before when individual servicers defaulted it was the bank that took the hit (minus the subsidy). But now the government takes a hit for all defaults and this reduces the pot of money that DOEd has to provide the loans in the first place. Perhaps the decision to transfer loans to private lenders was a way to overcome this issue?
Once my consolidation went through, my experience with the Direct Servicing Center has been good. I’m on IBR and manually do each payment as my employer makes a donation to the cause annually and I don’t want to make a double payment for those months. The payment is larger than what’s due and the website advances my due date (I’m on the Public Service Forgiveness track so there’s no incentive to making duplicate payments). My interest rate is the average of the loans before consolidation, which is high at 6.75%.
The only thing I wish they would bring back is the column in a chart showing which payments qualified for PSLF. Hopefully they don’t move my account but I’ve already been a customer of Nelnet and Sallie Mae and am fine with their systems, so it would be fine.
Again – I manually schedule my payments though. I was wary of setting them up on autodraft and with PSLF, the .25% interest rate reduction doesn’t matter.
My loan was in default, and I rehabbed it through ACS (who, like others said, are the devil). My rehabilitation was finished back in June, and they sold my loan to a new servicer. My new servicer’s website is so SLOW that I’ve had to log out and log back in because trying to load my account information makes the site time out. It can take up to 4 days for a payment to clear, and all the while I get threatening emails about my payment being late and how they have an absolute right to garnish my wages. My payment is due the day before I get paid, and I haven’t been able to rearrange other bills to be able to pay it from an earlier check so it is always a day late. That’s my fault, but one day late does not make me a deadbeat, especially when I’ve submitted a payment and their system hasn’t cleared it yet.
Anyway, what really gets me is that I have NO idea how long I’ll be paying on this loan. That information was never provided via mail, nor is it available on the account information online. I tried to call, and there is no way to speak to a human. None. If you want to change your address, you need to leave a voicemail, spelling out any uncommon words. I found a “complaints” email, which I used to ask them for a direct extension to someone who could answer my question about my term, but after 2 weeks have not heard back.
very recently, the Department decided to move my loans from two servicers to one.
They did this two days before my employer send two grand to the loan servicer to whom i no longer owe any money. That two grand has disapeared so far.
Additionally, these two loans are at *very* different interest rates, and I pay much more than the minimum. They have no automated way for me to put extra payments towards the higher interest rate loan — so I am stuck, once a month, logging in and paying it online.
I’m not going to give them access to my checking account. Not now. Not after this.
Just got switched from Nelnet to MOHELA. They’re my husband’s old deferred loans which I pay with a check so we haven’t had any hiccups with the transition. I’ve been paying off our debt in the order that the bills aggravate me and now after clearing our CCs, I have had my eye on focusing on these. It’s old, dusty debt that bugs me and I want them gone. All these stories are fueling the fire to take them out asap.
Sallie Mae and their associated services has always been lousy at servicing loans– I had similar problems 20 years ago. The best was when they CASHED MY CHECK for the wrong amount– i.e., NOT the amount that was written on the check– and then dunning me for underpayment. *shakes head* But the real difference between student loan services and others is that it’s so hard to transfer to another company so at least it’s not the same financial services company messing up– if I had stayed with the same large bank for 10 years, I would have experienced about the same level of mistakes and lack of customer service.
I’ve found that in general when it comes to financial services, if a company is big enough to sell shares, it’s probably too big for me to get the kind of customer service I prefer. Small banks, credit unions, etc. give me better service.
Wow, now I’m worried. I have my college loan through Sallie Mae, and so far, all my payments and servicing has been flawless. I haven’t had any trouble at all, and I just have another $1,000 left to pay off. I hope I can make it all the way through with no problems.
I’m sorry that you had bad luck through their site. :(
I, personally, have no complaints with Nelnet or ACS. The latter processed my IBR application quickly and I have no issues. The former does a wonky thing when I pay over my balance and “advances the due date” but I just ignore that and continue to pay each month.
Subsidize home lenders and guarantee home mortgages, and you get a housing bubble. Subsidize student loan lenders and guarantee student loans, you get a ___________ bubble.
The government should step out and let the private market decide how much a college education should cost. Though people have their hearts in the right place when advocating government involvement, it jacks up tuitions, and incentivizes naive students and parents to “invest” in an education that isn’t financially worth it.
This experience sounds extremely frustrating. Don’t expect the process to get any better with a monopoly running the system.
If you want your overage to go to your principal, you might want to double check with them to confirm where it’s going. Prepaying and paying add’l principle are two different things.
edit: oops this was in response to #35
My husband’s loan was transferred a few months ago, and we hate the new servicer. We actually wanted to make an extra payment and couldn’t get the website to work. It showed I had scheduled the payment but never took the money out of our account. What kind of business won’t take your money?
Interesting! My loan is also being serviced by a new company, but I haven’t logged into the new site yet to check it out. So far my debit payments have transferred smoothly and have continued as scheduled. Your story did remind me of what happened to me earlier this year when I tried to make an extra principal payment. They applied it to the following month’s payment instead of to the principal. When I called, they gave me some very confusing instructions as to how to avoid this and they said it was too late to apply it to the principal. So frustrating.
We are paying some of our children’s student loans. (Just one at the moment.) Since I am something of a troglodite when it comes to electronic banking, I just write ACS a check every month. In the interest of simplifying arithmatic, I just round the payment up to $300. It may interest you to know that they managed to mess up the payment schedule for check writers, too, and we actually wound up skipping a month (which was ok due to a bunch of medical bills that hit then.) However, even though I pay the same amount every month, what ACS says I owe varies widely — like from less than a hundred dollars to about $278. So I just ignore that and continue on my own path. It would be nice to know if there is a prayer of paying it off before I retire, though.
And when the next child’s bills come up, what really worries me if the loans that we co-signed for her are going to be lumped in with the ones that we did not.
I used to have loans through the Federal Government and whenever I needed answers I could leave a message and they’d get back to me – in a week or two or more. Frustration – especially when you wanted answers now.
Then I actually worked for a student loan company (for 5 years) that offered their clients excellent service and it was rare for a student to call and get even put on hold. The company’s premise was if you offer excellent service and be helpful, you’ll get more business by word of mouth. Colleges loved this lender. They were always placed on the preferred lender list. Our students raved about us. THEN – the wonderful government decided to cut out the middleman and get any profits the lenders were making to now be directed to the government.
The company I worked for of course went out of business. The students were the biggest losers because they now received really BAD service, thanks to it being governmentized.
There will always be one or two bad banks just as there will always be one or more bad stores, restaurants, gas stations etc., and because of the press of these one or two bad banks, the rest were scrapped and we now only have the gov. Is the next step is the gov taking over the stores, restaurants, etc.?
I hate not being in control – especially when I’m involuntarily switched to another service or product!
Hopefully you got the kinks worked out and won’t have to listen to ‘crickets’ anymore.
I know it is fun to complain about student loan service providers, but PLEASE PLEASE PLEASE take a few minutes to file a complaint with the CFPB (Consumer Financial Protection Bureau) – if change is going to happen, it will likely come from here! Most of you could just copy and paste what you have already written here!
http://www.consumerfinance.gov/complaint/
-Ken
I paid off my student loan balance about 5 days before the scheduled draft date. They drafted my payment anyway. My servicer can’t help, the direct loan people can’t help, I’ve just got to sit and wait, hoping they return my $250 soon.
If things really haven’t changed in the last 17 years (when I paid off my student loan “early”), if you sit and wait not only will nothing happen, they will keep taking money out of your account.
If you haven’t already, make sure to cancel the autodeduct with the servicer.
Then start writing/calling/smoke-signalling the lender to get your overpayment back.
You will get your money back but it may be a hassle…
My wife’s loans were transferred to ACS, and 7 accounts somehow became 4. Now, you might think that accounts with similar rates were simply combined from 7 to 4, but inexplicably at least one of the original 7 was split into 2 of the 4 new accounts. It took far, far too long to figure that out, just trying to make sure the amounts made sense and that we hadn’t gotten screwed by the transfer.
I also echo the complaints that there is no easy way for principal reduction payments to be preferentially targeted at higher-rate loans. They will not do what is best for you!
Actually, as of a few months ago when I paid off the last of my ACS loans, on the payment page I had to specifically check the box(es) next to the loan(s) I wanted my payments to go towards and also write the specific amount I wanted to go to each specific loan. That way, I always paid my snowball to the highest interest loan. It was very easy. I hope this didn’t change!
Have you tried ReadyForZero? Would love to hear your thoughts?
ACS was processing my Perkins loan, and they were bad to deal with. But then the Dept. of Education took my loan. ACS would no longer accept payments and the Dept. of Ed couldn’t find me. For over six months I tried calling to find out who to send my payments to. I was either told they couldn’t find me in the system or their computers were down, mostly that their computers were down.
After six months, I finally send them a letter asking them to please contact me about my loan. They did, to inform me that they had sent me to collections for failure to pay. The refused to talk to me after that.
According to the collection service, Dept of Ed’s computers are always down. Goverment service at it’s best. I made that loan a priority and paid it off right away.
My other loans were through Sallie Mae and although the Dept of Ed took some of those over as well, they left the administration with Sallie Mae (which makes no sense to me). They were great to deal with.
I’ve been using kwikpay on the old site for about a year with no problems..just got switched to edfinancial and I too noticed my kwikpay pay info was missing so I just input it an made sure that it was set up again. I watched my account like a hawk so if things go awry I can usually take care of it quickly.
I, too, had the same issues. I also used Kwikpay and the payments were not deducted. I wasn’t paying attention until I got a phone call from them saying I was 3 months behind! There is also apparently no way to complain about this. Another thing to watch – my interest rate mysteriously went from 6% to 9% and they don’t seem to know why. Another example of the Obama Administration stickin’ it to us. I can’t believe these “loan servicers” are allowed to get away with this.
Direct loan switched mine to Mohela a year ago and I still have not received a bill. They have been a nightmare. Luckily I have made a ton of extra payments and only have $200 left to payoff. But really, charge me interest for 12 months while making it impossible for me to make a payment? Ridiculous.
Just because you are paranoid it doesn’t mean they aren’t out to get you. Sounds like a very precise analysis to me!
We have the exact same problems!!! I wish someone would look into this. I feel like I’m defrauded monthly. They “lose” payments, change numbers, etc.
My husband’s work pays on his student loans (not much, but it helps cover the interest) and my husband is also back in grad school. EVERY MONTH we fight them not to put his loans (he has 8 different loans) in deferment. Every time they get put into deferment, his work doesn’t pay that month. We end up losing lots of money each year because of this! Errrr student loans!
I did not take student loans nor did we have to take out student loans for our children’s education – thankfully.
However, after reading all these comments – about midway through I thought to myself – I sure hope Obamacare is not this f#@$ed up.
With a husband that has stage 4 met. melanoma I fear that obamacare is going to be a worse stress than my husbands cancer. Fingers crossed.
Maria,
The Patient Protection and Affordable Care Act (“Obamacare”) puts most people who earn more than 133% of the Federal Poverty Level (~$20,000/year for a family of two) into private insurance plans, with a federal subsidy if your income is below 400% of the FPL.
This means that you’ll be a customer of a private insurance company. And frankly, private insurance companies screw people over all the damn time – but that’s not the fault of the new law. If anything, some provisions of the new law will help insure that your health insurer can’t screw you over quite so badly.
So can we have a poll as to the best servicer? We’re about to consolidate and start the race to debt freedom.
No one is too happy with this stuff, period. However, if you pick up the phone and call them, I’ve found them to be quite helpful. I know we’re in the 21st century and all that but picking up the phone isn’t that hard kids!
My husband’s consolidated loans got switched from Direct to Mohela just under 2 months ago. On top of concerns for when our payment will come out, our payment increased by $70! That’s a lot for us – he’s a teacher, I’m still in school, and currently we’re focusing on paying down a much smaller private loan. I skimmed through the comments here and didn’t see this specific issue of payment increase during the switch.
I’m with you on the Direct Loan site. A warning to all of you considering IRB repayment: after I moved across the country & switch banks I updated my KwikPay information online, only to have Direct Loans continue to withdraw from my old (and empty) bank account! This resulted in a lot of fees and confusion. The answer I finally got from them? Because I was on a IRB repayment plan, any changes I make on the website to my payment information don’t actually work. I have to fax in any KwikPay changes. Don’t understand why this isn’t communicated and why the website lets me change my bank account information.
Given the rising amount of student loan defaults, you think they would streamline this process to assist those of us that actually want to make our payments.
I had similar problems. I ended up submitting two payments because the system didn’t show they had gotten the first payment. Then both payments showed up on the same day. I got them to send a payment refund through the mail (still in the mail…) and called my bank up to cancel a payment to prevent overdraft.
So now instead of having 2 payments I have 0 payments and my money is in the mail >_<.
I was moved to FedLoan Servicing. I am on the Public Service Loan Forgiveness Program (state employee). When I came up for recertification, my payment increased by 1800% that is not a type. Yes, 1800%. I’m in the process of appealing, but not hopeful
Over a year late to this conversation, but…in my experience “auto” anything is never a good idea. I pay back my student loan via Nelnet each month — I pay triple the minimum payment, actually, and I only pay it manually each month without saving the checking account info. I print out each statement and I print out each bank record of the transfer. I’ve never had a problem doing this, not over three years of doing it.
Auto-debit is a terrible, terrible idea. It’s better to put a reminder of the due date in your electronic calender of choice and then manually make a payment. It’s also better for you — if you have to think about these things, you’ll think about your money and spending habits more frequently. Auto-debit is “out of sight, out of mind” and doesn’t lead to good financial discipline in too many cases.
Get rid of auto-debit and make manual payments. The reasons “mistakes” (that always benefit the service provider) are made is because they know you’re not paying attention on a regular basis.
Old post, I know. My fiancée got screwed over by the 2010 restructuring. In 2009 he had his remaining loans consolidated. He opted to have payments taken directly from his check. Fast forward to late 2010. He got a promotion and his company switched to biweekly pay.
He never got any notification about resubmitting his payment information. He didn’t notice that he wasn’t paying towards the loan anymore, he didn’t check his pay stubs.
So, it went unnoticed until mid 2012 when I pulled our credit reports. I tried to track down where his loans (they un-consolidated due to lack of payment) ended up. Caught most of them in time and got back to paying them.
But one servicer, the one with his biggest loan, had to be difficult. They don’t have their own website. We figured out eventually that the myeddebt site would funnel the money towards the loan. So I made a payment and updated his information there.
About a week later we received snailmail stating that since they tried to contact us (false) and we hadn’t made payments (false) he was now defaulted. They -then- applied the payment I made a week earlier, with a 20% collection fee taken out of it. And his paychecks were garnished.
We tried to fight it, we were told tough luck. The company likes their sweet sweet 20% collection fee after all.
This week was his last garnishment. His account was down to 15$. I made a manual 20$ payment to cover the rest. Days later, this payment hasn’t been applied. I’m half expecting them to garnish his check again next week just to give me a headache.
Good riddance to the sucky servicer and the biggest loan out of the way. Now we can funnel that money towards the other loans and be done.
Then it will just be a waiting game for his loans to fall off the credit report. He has around 10 bad standing accounts reporting because in his year and half of unknowingly not paying they got transferred to different companies.
I’ve been repairing his credit by having him on all my credit cards as an authorized user. That’s let him build up enough momentum to be approved for his own major cc’s (yay for capital one’s low standards). Once the loans fall off the report he’ll be left with just happily aged consumer credit lines.
So ends our horror story. The evil servicer got an extra 500$ in convenient collection fees but we’ll live.
Saying they’re dedicated to providing exceptional customer service is more than just a “little” inaccurate unless you consider being terrorized and strong-armed into bankruptcy by these people “exceptional customer service”.