Forum Thread

Screwed by Fedloan Servicing. Now what?

5,854 1,253 September 27, 2017 at 03:33 PM
Deal
Score
0
3,118 Views

Thread Details

0 Deal Score
3,118 Views
My wife and I are on IBR (Income-Based Repayment) plans w/ Fedloan Servicing (FS) and signed up for direct debit as well. Recently, we completed our annual re-application. Since we made more money last year than the year before our new payment calculation was higher. However, FS made an error when processing her application and failed to take into account that I also had a loan, which resulted in a payment amount that was more than 2x that permitted by the US Dep't of Education. Initial calls to FS simply resulted in them telling my wife "too bad." After speaking to the feds, who directed us back to FS' escalation dep't, things were looking up. The escalation dep't said they would correct it and we would receive notification of such in a few days.

We received notification of the correction a few days later, but the letter indicated it would become active in October and thus we would be charged double in September. We went back to FS again and they said the account would be put in administrative forbearance for September. We wait and the account still showed as in repayment a week later. We called FS again and were assured the acc't was in administrative forbearance despite it now showing on our end. We considered it resolved.

Today we logged in and my wife's loan showed as 3 days delinquent. The account was supposed to be in administrative forbearance and we are signed up for direct debit so this didn't make any sense. We called FS yet again. This time they state that the administrative forbearance was denied though we never received any notification of such. This is without question since we receive all correspondence electronically via the FS inbox and no such letter stating such exists. The rep also states that because the direct debit date fell on a weekend we were supposed to make the payment manually. False. Direct debit doesn't work that way with FS or any other organization. We ask for a supervisor. The supervisor tells us that direct debit was disabled by someone at FS for the month of September without our knowledge/approval and without any notification to us. He acknowledges all of this but nonetheless, states that we are responsible for the missed payment and that said missed payment will show up on my wife's credit report. Zero missed payments for 15-20 years, a credit score over 800 with all 3 reporting agencies and now FS is going to hit her with one for their error. We ask: How do we resolve this? Initially, he insists that we have to pay double this month and there is no other way. After some argument, he states that he can put the account in general forbearance for one month. Fine. What about the missed payment? That remains on my wife's account and will be reported to the credit bureaus as such. They insist there is no way around that. We call the feds again and, finally - after a dozen plus calls this month - they formally create a case. However, they reiterate that we should contact FS - again - an try to resolve it. Everyone keeps sending us in circles. Now what?

TL;DR: Fedloan Servicing made a slew of mistakes that resulted in my wife's student loan entering delinquent status through no fault of her own. They are now reporting this month as a missed payment to the credit reporting agencies. Can we get this resolved without their cooperation and if so, how?

6 Comments

1

Sign up for a Slickdeals account to remove this ad.

This comment has been rated as unhelpful by Slickdeals users
Joined Nov 2005
L10: Grand Master
30,367 Posts
3,908 Reputation
#2
yeah this is messed up. Direct debits tend to happen on next business day - I pay TONS of stuff by direct debit and it always happens this way. the CC companies don't have a problem getting their $$ laugh out loud

I see you are totally in the right here, but arguing the fact is going to be messy. If it were me I would have taken screencaps of all the stuff (e.g. admin forbearance) along the way, and just made the double payment in September just to not fark things up more than they already were.

Supposing you are able to get the payments back on track and the DD squared away, I don't know that a *single* missed payment would necessarily impact your credit. I'm as you.... both 800+ credit scores and I've missed a couple CC payments at some point - generally just call, tell them I forgot or overlooked, and all is OK.

Perhaps it's a good time to refinance with a company that isn't a bunch of assholes?

Note this is also (partly) why I have an app that records my cell calls....
Reply Helpful Comment? 1 0
This comment has been rated as unhelpful by Slickdeals users
Joined Jan 2006
Temporarily Banned
5,854 Posts
1,253 Reputation
Original Poster
#3
In hindsight, it definitely would have been better to just make the double payment and eat it. We never imagined they would have f'd this up so badly. Unfortunately, we can't legally record calls here in PA without consent of both parties. I've managed to record calls with some small businesses as the employees don't know any better and simply agree to it, but I've learned that the lenders seem to train their staff to deny consent. I hadn't considered refinancing, but I will look into it. This was actually the first major issue we've had with FS, but it's a doozy.
Reply Helpful Comment? 0 0
This comment has been rated as unhelpful by Slickdeals users
Joined Jan 2012
L3: Novice
296 Posts
42 Reputation
#4
Quote from ManUpOrShutUp
:
In hindsight, it definitely would have been better to just make the double payment and eat it. We never imagined they would have f'd this up so badly. Unfortunately, we can't legally record calls here in PA without consent of both parties. I've managed to record calls with some small businesses as the employees don't know any better and simply agree to it, but I've learned that the lenders seem to train their staff to deny consent. I hadn't considered refinancing, but I will look into it. This was actually the first major issue we've had with FS, but it's a doozy.
If they have any indication that they monitor the calls, that's your consent for them.
Reply Helpful Comment? 0 0
This comment has been rated as unhelpful by Slickdeals users
Joined Jan 2012
L3: Novice
296 Posts
42 Reputation
#5
Quote from ManUpOrShutUp
:
My wife and I are on IBR (Income-Based Repayment) plans w/ Fedloan Servicing (FS) and signed up for direct debit as well. Recently, we completed our annual re-application. Since we made more money last year than the year before our new payment calculation was higher. However, FS made an error when processing her application and failed to take into account that I also had a loan, which resulted in a payment amount that was more than 2x that permitted by the US Dep't of Education. Initial calls to FS simply resulted in them telling my wife "too bad." After speaking to the feds, who directed us back to FS' escalation dep't, things were looking up. The escalation dep't said they would correct it and we would receive notification of such in a few days.

We received notification of the correction a few days later, but the letter indicated it would become active in October and thus we would be charged double in September. We went back to FS again and they said the account would be put in administrative forbearance for September. We wait and the account still showed as in repayment a week later. We called FS again and were assured the acc't was in administrative forbearance despite it now showing on our end. We considered it resolved.

Today we logged in and my wife's loan showed as 3 days delinquent. The account was supposed to be in administrative forbearance and we are signed up for direct debit so this didn't make any sense. We called FS yet again. This time they state that the administrative forbearance was denied though we never received any notification of such. This is without question since we receive all correspondence electronically via the FS inbox and no such letter stating such exists. The rep also states that because the direct debit date fell on a weekend we were supposed to make the payment manually. False. Direct debit doesn't work that way with FS or any other organization. We ask for a supervisor. The supervisor tells us that direct debit was disabled by someone at FS for the month of September without our knowledge/approval and without any notification to us. He acknowledges all of this but nonetheless, states that we are responsible for the missed payment and that said missed payment will show up on my wife's credit report. Zero missed payments for 15-20 years, a credit score over 800 with all 3 reporting agencies and now FS is going to hit her with one for their error. We ask: How do we resolve this? Initially, he insists that we have to pay double this month and there is no other way. After some argument, he states that he can put the account in general forbearance for one month. Fine. What about the missed payment? That remains on my wife's account and will be reported to the credit bureaus as such. They insist there is no way around that. We call the feds again and, finally - after a dozen plus calls this month - they formally create a case. However, they reiterate that we should contact FS - again - an try to resolve it. Everyone keeps sending us in circles. Now what?

TL;DR: Fedloan Servicing made a slew of mistakes that resulted in my wife's student loan entering delinquent status through no fault of her own. They are now reporting this month as a missed payment to the credit reporting agencies. Can we get this resolved without their cooperation and if so, how?
Open up a CFPB complaint while you still can.
Reply Helpful Comment? 0 0
This comment has been rated as unhelpful by Slickdeals users
Joined Jan 2006
Temporarily Banned
5,854 Posts
1,253 Reputation
Original Poster
#6
Thanks for the replies. Just to give somewhat of an ending to this story ... After a few more calls, I reached someone in escalations that seemed genuinely interested in helping me resolve it. It's always in the back of my mind that the person may simply be playing a role, but I gave him the benefit of the doubt. Within 48 hours, the account was placed in general forbearance while the administrative forbearance was being reviewed. A few days after that they applied the general forbearance and then a few days after that they put it back into repayment as a new billing cycle had started. Everything is now as it should be on the account itself, but no one can say for certain whether this will show as a missed payment on my wife's credit report. I'll probably wait until January 2018 and then use one of her free credit reports for the year to see if it shows up at all.

I have also canceled direct debit on both of our loans and gone back to manual payments. The 0.25% we were saving for direct debit isn't worth the headache. There's too much room for error since any Fedloan Servicing agent can suspend payments no matter how low on the totem pole they are and notifications of suspension of the service are not sent to the customer (only notification for cancellations).


Quote from Aseras
:
Open up a CFPB complaint while you still can.
Will do. It's probably a good idea to have it on file should this show up on my wife's credit report as a missed payment.
Reply Helpful Comment? 0 0
This comment has been rated as unhelpful by Slickdeals users
Joined Feb 2014
L3: Novice
177 Posts
54 Reputation
#7
Happened to my wife and I as well. They have a means to go back and adjust the rate for the missed payment and allow you to pay. That being said, we did that about 90 days ago and have never gotten the call that they indicated we would get to make that back payment at the correct rate.

On ours, the person calculating stated in their system that they did not have my information even though it was on the form. When this occurred to us though, they did suspend the payment or place us in forbearance so no "missed" payment.
Reply Helpful Comment? 0 0
Last edited by colvin84 October 18, 2017 at 11:48 AM.
Page 1 of 1
1
Join the Conversation
Add a Comment
 
Link Copied to Clipboard