Why Did My Student Loan Get Transferred?

by Emily Guy Birken · 73 comments

A few months ago, I logged onto the website for my student loan in order to check on my balance — when I found that I did not have one. Suddenly, the $12,000+ I owed had gone down to $0.

I’m suspicious by nature, so rather than celebrating that some secret patron had paid off the rest of my education, I started wondering how this obvious mistake could possibly mess up my financial plans. I put in a call to my federal loan-servicing center, and I was told that my loan had been transferred to MOHELA, a Missouri-based loan agency. The transfer went through a full two weeks before I was informed by mail that it would happen.

My experience with MOHELA thus far has not been exactly positive. But putting my personal concerns about my new loan administrator aside, I wondered how the U.S. Government could legally transfer my federal student loan. Here is what I found out:

How and Why Loans Are Transferred

The federal government only recently allowed loans through the William D. Ford Federal Direct Student Loan program and the Federal Family Education Loan program to be transferred to alternative loan servicers. According to Jill Rooney, Ph.D., the U.S. Department of Education (USDOE) announced in September, 2009 that it had “expanded its federal loan servicer team to provide additional servicing capacity for Title IV loans owned by the Department of Education.”

In English, that means that the USDOE was going to allow not-for-profit loan servicers to start taking over administration of federal loans. The reason behind this is to uphold a recent law that cuts out all banks and private lenders from the federal student loan industry. This law is part of a reform that is attempting to keep private business out of student loans, and thereby reduce costs, errors, and instances of fraud.

Who Can Take Over Your Loan?

Prior to this change, only six loan servicers would have handled the administration of your loan: Department of Education Student Loan Servicing Center (ACS), Direct Loan Servicing Center (ACS), FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Nelnet, and Sallie Mae. MOHELA was the first not-for-profit loan servicer to be awarded existing loans, but there were a total of 15 new contracts awarded to alternative loan servicers. The contracts with these servicers have implementation dates between October 2011 and January 2013.

What Does This Mean For a Borrower?

Just as when a mortgage is sold, the transfer of a loan requires the new owner of the loan to honor the original terms. In theory, everything should go smoothly with these transfers, and you should be able to continue making your regular payments with your new loan administrator. However, no major transfer of the amount of information represented by this many loans will be completely seamless. Borrowers will need to stay on top of their own loan information to insure that their loan agreements are honored. Jill Rooney suggests these steps to protect yourself if your loan is transferred to MOHELA or any other third-party loan servicer:

• Keep a log of all contacts with and communications from [your servicer.] Specific dates are important.
• Find and hold onto the terms of your original federal student loan, so that you can track any changes.
• Maintain copies of cancelled checks, print out copies of screen shots from the [loan servicer] website that show payments that you have made, and copy bank statements that show direct payments.
• If you have any problems, call customer service and try to resolve them.

The Bottom Line

It is up to you to stay on top of your student loan, no matter who your loan administrator might be.

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{ 73 comments… read them below or add one }

Helen July 25, 2012 at 11:46 am

I was annoyed when my loan was transferred to MOHELA from DLS. First off, you’re right – they didn’t notify me until weeks after it happened, meaning I had made my regular monthly payment through my bank’s bill pay, but then at the end of the month when I was checking all of my loan balances, I saw what you did – a $0 balance. Very odd. Took a while to figure out where my loan had gone, and it took almost 2 months for my payment to meander on over. Also I was way ahead on my loan payments, meaning technically I didn’t have to make payments if I got into a bind, but when transferred I noticed THAT wasn’t transferred. Thankfully now they did something and I am still adding extra cash to my monthly payment so I technically still don’t owe a payment until August 2013, but it was just not a pleasant experience all around.

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Sam December 25, 2012 at 6:44 am

My loan just got transferred, causing my credit to take a hit (because the student loan account was my longest open account). Is there anything that can be done about this?

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Ni January 18, 2013 at 12:41 pm

My student loan transferred to OSLA – Horrible. Long wait times – over 30 minutes on hold and every time I call I get different information. I sent three payment to US Department of Education but they were supposed to go to OSLA. After 3 months, only 1 payment is reflecting. Dealing with US Department of Education was always a much more pleasant experience.

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Holly July 8, 2013 at 7:31 am

Same issue – I would suggest getting your credit report. They reported this on mine TWICE (13 – 90 day late payments and 13 – 120 day late payments). I found this out when I went to purchase a new car. Wrecked my credit. They agreed to update – but I will still have to wait until the credit bureaus refresh.

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Mike McMahon February 4, 2013 at 8:08 am

I had a similar experience, except that the transfer was from ACS to Nelnet. Apparently, they’re not equipped to efficiently forward payments made to the ‘wrong’ address and I got a notification that I was 30 days past due. Kelly at Nelnet was quite helpful and was able to tell me: (1) Who my previous servicing company was (I only knew them as ‘US Department of Education’ and a PO Box) (2) that my payments would get transferred, but it would take 30-40 days! and (3) there would be no credit report impact until I was 60 days past due. I’m now on hold with ACS to ensure that they do in fact forward my payment. I had attempted to access their voice response system, but it no longer recognizes my SSN. It seems that the companies involved could have done a lot better job on the transition and saved their customers a lot of grief, wasted time and potential credit impact.

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Crystal June 13, 2013 at 3:43 pm

I had no idea that they transferred my loans to someone else. I always get online each month just to double check that kquick pay is still set up. I have a autopayment set up on the 14th of each month because when first setting it up was a nightmare. They tell me that Great lakes took it over, over 30 minute wait time & they don’t recognize my ss#. I just had surgery yesterday should be resting but no I can barely speak and trying to locate an account they pawned on someone else. So, now even though I’m supposed to be on complete bed rest and no speaking. I’m stuck on the phone trying to determine if I have to get new account log in passwords, autopay, and waiting that is highly unneccsary. Also, I wonder if you still get a discount for autopay if they give your account to another lender. I’ve read they are supposed to honor the ORIGINAL agreement that was set up. We shall see for another 15minutes still on hold.

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101 February 14, 2013 at 8:32 am

Once your original contract has been sold it is terminated. You never signed anything with these people calling asking for money. You never set up an account with them. Do some research on this.

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on the edge February 19, 2013 at 1:50 pm

101, instead of making a statement such as the one you posted here, provide some links or substantiating information. If what you say is true, some people who can’t afford to make even the smallest of payments, may benefit from your insight. It is rare that any of the agencies seem to be willing to listen, and even though little hope for relief exists (and none of the promised great jobs or increases in salary are actually available), maybe your information could help straighten out some bad situations. Living on $22,000 a year doesn’t leave room for anything else besides food, shelter, and water.

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Terms and Conditions March 28, 2013 at 8:05 am

101 – you’re absolutely wrong. Read the Terms and Conditions on your promissory note. You’ll find the lender has every right to sell or move your loan around. Do not put others at risk by providing bad information.

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Jason February 7, 2014 at 9:58 am

Actually he is right on. If you have signed nothing with the new company and request a statement of accounting with proper indorsement you can have the contract voided because they will not be able to provide you with the requested documents due to the fact that they do no have those documents. Proper indorsement requires an actual signature and no one will sign their name to potentially fraudulent documents for fear of legal action against the individual and the company they represent.

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Jonathan February 27, 2013 at 5:30 pm

Right now I’m on an “Unemployment Forbearance”

Now that the federal government sold my loan to Sallie Mae, will I be able to keeep my forbearance? (I’m still unemployed)

And also, how will this affect deferrments if I go back to school?

Thanks!

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StheCook February 28, 2013 at 6:13 am

One of my loans was sold to Sallie Mae awhile ago and since you’re currently in Forbearance now, it SHOULD carry over to Sallie Mae. The loan servicer that sold your loan to Sallie Mae should have sent you something stating that your status would remain the same with Sallie Mae. Also, as long as you remember to keep up with applying for your forbearance with Sallie Mae and your circumstances are still the same, you should be able to remain in forbearance.

Everything should be a smooth transition, however Sallie Mae can screw up and getting them to correct their errors can be difficult and frustrating (Most of their customer service reps are in India or other countries and communication, at least from my experience, can become a problem) . I would make doubly sure with Sallie Mae that everything transitioned well before assuming that everything carried over without a hitch.

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StheCook February 28, 2013 at 6:21 am

And about the deferments, the same rules apply. Sallie Mae acknowledges in-school deferments.

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wisewoman March 28, 2013 at 8:50 am

I just found out my loan was transferred to Sallie Mae and is showing a payment date due in 2014. I wrote to them and they said its due to a pay-ahead status. WHAT DOES THIS MEAN??? They have yet to respnd to my 3rd email I have sent. I tried to call but was put on hold for 22 mins and then had to hang up. This should be illegal.

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Jake November 28, 2013 at 9:49 pm

I agree. This should be illegal. My loan was transferred to Sallie Mae too and they are holding back my payment due. Having dealt with them in the past, what you are describing is one of their scams. They try to deter you from paying ahead so that they can collect as much as possible off interest. Sallie Mae is a very dishonest company. I had private loans with them and it was quite common for the balance to increase instead of going down with regular payments. They charge insurance fees to collect even more money. I just hope that they can’t do that to these transferred loans. Their goal is to get you to pay as little as possible for as long as possible. The best way to deal with them is to follow your balance online. Make your payments with your own envelopes because they won’t send you a bill as long as you’re ahead of schedule. I called and they told me it was against Sallie Mae policy. Pay these scumbags off as soon as you can. It’s the only way to get rid of them. Keep track of everything. If you read comments online you will find that most people realize Sallie Mae to be a very dirty company. They allow you to defer forever but make it difficult to make payments.

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Jon 1986 March 30, 2013 at 7:23 pm

It’s very legal for student loans to be sold / transferred. I have no issues with this practice.

What I take exception to, is the lack of communication between the entities involved with the transfer. I had a loan that was transferred. I tried an electronic transfer. It was denied, no response. I then sent four separate checks, it took over 10 weeks to have the unprocessed checks returned to me. In the mean time, I’d written three certified letters to ACS. I received a response two weeks later, stating to contact your new provider.

I’ve now sent certified letters to the President / CEO & to the Ombudsman of the new institution, managing my loans. I’ve yet to receive any account information from my new institution. I’ve no idea when the loan was transferred, several months from what I can tell. The ACS website information has been terminated.

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Bcinque April 7, 2013 at 10:49 pm

Here’s my experience with a private loan corporation: Before Direct Loans consolidated my loans and bought them from Sallie Mae, I went through hell with them. It was the most demoralizing horrible experience Ive been through. It started when I became ill and lost my job and wound up in the hospital. After several months, I was not well enough to go back to teaching so I applied at a book store making 9$ hrly . Sallie Mae called me and everyone I know. I kept telling them that I was in forbearance which Sallie Mae conceded as fact. However, Sallie Mae’s office had a collection agency and loan servicing and the collection agency refused to speak to the Sallie Mae loan servicer to validate that i was in forbearance. Instead, they called my new place of employment every 15 minutes round the clock. They literally crippled our business. I wound up losing my job. They would call me and tell me that I should have died in the hospital because it was the only way I would get away with not paying back this loan. I told them I could pay less than the 800$ monthly they were demanding…I barely made 800$ monthly and just didnt have the money to give. They attacked me and my family for nearly a year until I spoke with the ombudsman and I was able to consolidate my loans with direct loans. Just recently, they fired all untenured teachers where I was employed and once again Im making crap money. So now what? Am I going to have to deal with being insulted and attacked? Im so sorry I went to school. Both my kids recently told me they do not want to go to college because they are so afraid of what they watched me go through. I thought Obama was going to help us to deal with the heavy burden of all these debts and the inability to make enough money to pay them off in our lifetime. I feel like this loan is a noose around my neck just threatening to kill me every time something goes wrong. I cant sleep I cant eat Im in a constant state of anxiety just worrying about how Im ever going to be able to pay this growing monster in its entirety.

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uhoh June 13, 2013 at 6:35 am

Check out the Consumerist.com

Collections agencies can not threaten you in almost any way. They can not harass you or anyone you know. They can not harass your boss. They can not tell you that you should have died. This is all seriously illegal stuff that a judge will negate your owed money for.
If they happens again record the conversations and get a statement from your old boss about why you were fired. Then take this to a lawyer.

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Derp April 12, 2013 at 7:22 pm

Just noticed my loan was transferred as well. Absolutely no information on it. Happened today—the day I threw in a $5k payment, which I bet will now not show, but which these crooks happily stole from me.

I was okay with directloans and I paid in $60k in the past 11 months. I was hoping to finish these loans off within a year of living like a hermit. I am about 3 years ahead on payments because of how much I’ve thrown in.

Absolutely absurd that they can and do this. Your original promissory note probably doesn’t even indicate it can be sold. What they’re doing is packaging these loans into securities, essentially the exact same thing they did with mortgages. It’s extremely lucrative for these lenders and other companies, and of course the politicians that create the agencies to buy these securities get kick backs, so they just push it through.

I’m wondering if I should even bother paying now.

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Joe May 9, 2013 at 7:13 pm

Derp — they’re direct loans, if you don’t pay they’ll take your taxes and garbage your wages for the rest of your life. They can even garnish SSI income upon retirement because they are federal funds.

For everyone else. Mr. Obama’s programs have destroyed student lending. The DoE can’t handle the burden, they ‘services’ are angry they can’t lend anymore, trying to make any money possible, and are taking all of this out on consumers.

This law was placed on the last page of the Health Care Reform bill and its biggest selling point was income contingent and income based repayment plans. Essentially your payment is tied to your income for 25 years. If you still have aid after 25 years of on time payment they will forgive balance. The kicker, any forgiven amount needs to be filed as additional income on ones taxes.

This is a ridiculous policy and they should have just done a better job policing subsidized lenders to prevent against fraud. But. Our president hates private business and profit and wants a hand in every aspect of you life, including your finances. I really appreciate you all voting him in. Lol. Good luck all. I have about 30k in Direct Loans and I’d kill to be able to get with a private firm but that’s now impossible.

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Adam May 28, 2013 at 7:14 am

Joe – You’re outside your mind. Everyone I know with a private loan would kill to have it through direct loans. The private loan servicers don’t offer any income contingent plans and often won’t even defer your loans. My girlfriends loans were sold to Wells Fargo (subsidized loans through her school, not privately obtained ones) and they cancelled her income based plan she had with her original loan agency and tripled her payment. My sister is in the same boat. Anyone with a private loan right now would I’m sure be happy to trade debts with you if you want one so bad. In fact, direct loans are so cheap I bet you a bank would be happy to trade you a loan to them for your debt.

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Lindsay June 12, 2013 at 10:47 am

Agreed. When I first got my job and was just an intern making $10/hr my private loan provider did not care that I couldn’t afford my $650/month payment. They wouldn’t even let me extend my pay back time to lower monthly payments. Luckily my parents could help me out until I made a full time salary. My federal loan provider on the other hand let me defer my payments with almost no questions asked. The interest rate is much lower too.

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Marcus June 3, 2013 at 10:44 am

I just checked on my student loans to make a payment and it turns out there is a -0- balance. Obviously this means that the account was sold but I was never informed of this. What’s worse is that I was about to make a $2,750 payment. Because it is transferred I cannot make the payment which means that I am going to be paying interest on that amount. From everyone’s looks like it will take a few months until this is sorted out. While it’s not a huge amount of money I feel like someone stole $20-30 dollars from me because of the interest that I may be charged for a payment I was ready to make today.

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Patrick McDougle June 3, 2013 at 10:52 am

Make the payment anyway. I’m pretty sure they will be forced to forward the payment to your new servicer effective the same date that it was received.

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Marcus June 3, 2013 at 11:15 am

I can’t because my account is showing a zero balance. When I click the pay now button it says that “We are unable to accept an on-line payment for your account at this time.” I hope this doesn’t turn into a headache for me.

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Patrick McDougle June 3, 2013 at 10:50 am

When your loan is transferred, also make sure to double check the balances/payoff amounts. I’m pretty sure my balance went up across servicers. Progress has been slow, but ACS is slowly realizing they made a mistake. I’ve been contacting them for 2 months just trying to get my $198 back.

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Marcus June 3, 2013 at 11:17 am

That’s a good idea. I made sure to printout my loan summaries so that way when everything is figured out there won’t be any surprises.

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mildred barber June 13, 2013 at 3:48 pm

I was in school back in 2011 and I did applie for a student loan but I never recived my money they told me that it went to the school but never got no money but now I have to try and pay them back which I think that is not right

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Justin B June 19, 2013 at 6:41 am

Needless to say I was quite surprised last night when I logged on to my Direct Loan Servicing (DLS) account and saw that my $40K in student loan debt had magically been reduced to $0! For about a split second I was really exctied to see a $0 ballance and then reality hit and I had no idea how this $40k was paid for. My brain started racing with thoughts of maybe I accidently hit the pay in full button and what that would do to my finances. After collecting my thoughts I then went to the “Pay Now” section of the DLS website and found the following message.

“We are unable to accept an on-line payment for your account at this time.
This could be related to one of the following reasons:
•You have paid your loan(s) in full
•Your loan(s) was paid in full by a consolidation
•Your loan(s) has been transferred to another servicer
•You have defaulted on your loan(s) and a claim has been filed with your guarantor or assigned to Default Management Collection Services (DMCS)
If you would like to see details about your paid-in-full status, please refer to the Loan Benefits and Details for your account status.

If you have defaulted on your loan(s) and have additional questions, please contact us.”

With the 4 different possibilites I figured that I should get to the bottom of what happened. So my first step was to call the toll free DLS phone number. After going through the automated options I was told (still by an automated voice) that my loans had been tranfered to FIA and then was provided a phone number and web address where FIA could be contacted. I am still not exactly sure what FIA stands for because the website that was provided was http://www.myfedloan.org which is for a company called FedLoan Servicing.

So step two was looking at the myfedloan.org website. I noticed there was a place to log into an account so I tried using the same account information that I used for the DLS site, and to no suprise that didn’t work.

So on to step three using the phone number provided by DLS to contact FedLoan Servicing. Upon calling the first thing they ask for is either and account number or social security number. Well considering I do not yet have an account my only option is my SSN. But i’m not going to lie, it makes me a little uneasy with all of the scams out there to provide my SSN to a company that I have never heard of and don’t actually have an accounct with. So I decided that I would not enter my SSN using the key pad on my phone and chose to talk to a representative. The representative was pleasent and told me that it was perfectly normal for federal loans to be transfered to another servicer without any notification. This seems a bit fishy but apparently the govenment does have the right to do this and it is in writing somewhere that I agreed to. Gotta love the fine print. Anyway she asked for my SSN and even though I still wasn’t really comfortable giving it out, I did. She told me that she could see that my loans were in process of transfering, and it should take about two weeks for that to be complete. She couldn’t see the balance as of yet just the number of loans and that they would be recieving them. She also told me that once the transfer is complete they would then be sending me correspondence about the transfer. This is really the only part that bothers me (at the moment) I don’t mind if my loans get transfered as long as the amount doesn’t go up and the service is similar. But I would like a little notification that it is happening, instead of just logging on to my account and blindly seeing a $0 balance.

In the end I just hope that FedLoan Services can provide the same type of service that DLS provided and that there is no hiccup in my payments. I have never missed one and have worked hard to maintain good credit, if a transfer like this, with no notification, causes a late payment or blip on my credit that would be upsetting and unfortunate.

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Justin V June 21, 2013 at 6:18 am

A very similar situation happened to me(from DLS to FedLoan too). But I got an email earlier this week stating they were being transferred at least. Today I made an account on the new servicers site but on either site I could not make payments. Today is the day my bill is typically due so I am very worried it will affect my credit, ive never missed a payment for anything in my life, sometimes selling assets to pay bills to keep spotless credit. I called both agencies and to no surprise got conflicting information. I called the Department of Education and they said they have no control over the situation. Im at a loss. Im in the middle of getting approved for a house and this could effect me for the next 30 years. I have no idea what to do and ive been freaking out for hours. I apologize for any typos or anything im on my phone.

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Marcus June 21, 2013 at 8:53 am

I don’t think you need to worry about your credit being shot. There is a two month grace period before anything is reported to the credit bureaus. Based on previous comments I imagine that your loan will be accessible before this date arrives and then your payments would be considered timely. Also, although I have also never been late on a payment I would imagine that they would give a call before anything detrimental is sent to the credit bureaus (although I would’ve also thought that they would also contact me before selling my loan just to give a heads up and what to expect).

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Vince June 21, 2013 at 8:24 am

I received a letter from Direct Loans saying the loans will be serviced by Sallie Mae. I PERSONALLY have never had problems with them but will be paying them off ASAP as I do not want a headache from them as there are countless of stories online of people having problems with them. I am fortunate enough to be able to do that. I liked Direct Loans and am hoping that everything is transferred correctly.

Good luck to everyone. College is overpriced. The government should NOT be in the busy of making student loans. It allows the college’s to charge whatever they want because THEY KNOW the money will be lent by the government. THAT IS WHY TUITION IS RAISED EVERY YEAR! Get rid of government loans and tuition will plummet along with the ridiculous salaries some of those working in colleges make.

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Ron June 22, 2013 at 12:09 pm

BEWARE SALLIE MAE – had Direct Loans for 5 years no problems. Sallie Mae became not for profit loan servicer – I had bad experience with Sallie Mae on a prior private loan which I had paid off.
Now I lost my job need hardship deferment & of course
Called 3 times told no problem sent in or fax info – follow instructions exactly
Guess what – refused
NOTE: if you try to lower your payment instead of deferment you lose your Original Direct Loan Terms! You will be under Sallie Mae & they can arbitrarily change your consolidation interest rate – check out their lower payment warning
– it is very deceptive & when your desperate to get relief from higher payment it is easy to click on OK – DO NOT do this
Contact Ombudsman & complain about Sallie Mae
Write to your congress rep
Sallie Mae should not be servicing direct loans or we should be able to select the third party servicer

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Jake November 28, 2013 at 9:56 pm

Yup. Sallie Mae is a criminal company. I feel sorry for anyone who has the displeasure of dealing with them. They will attempt to steal your money.

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Calzone June 28, 2013 at 3:09 pm

I’m in a similar situation. My loan was transferred from Direct Loans to Great Lakes. However, my minimum payment went up $17.82 a month, that’s over $200 a year more. When I called (and waited on hold for 40+ minutes), their explanation was that they do not factor in the .25% deduction for autopay until the end of your loan. So I will get a few months knocked off at the end. They stated that they do this because you are not “locked in” to the discounted rate and you can cancel the autopay at any time.
Is this fair? Why should my payments be changed just because my loans were transferred? Do I have any recourse on this?

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Dan June 30, 2013 at 7:22 am

I am curious how this will impact my ability to continue making payments, as I was under the Income Based Repayment Plan. It was awesome and I am really hopeful it will continue now that the loans are not serviced through Direct Loans. Anyone else under the IBR plan? Were you able to continue once your account was paid off/transferred?

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diane January 7, 2014 at 6:51 pm

I am also under IBR and I am able to continue under IBR with my loan beingn transferred to Mohela. There was a minor hiccup during transfer when it showed i was a week past due. However, the direct deposit came in and my bank statement shows it was drawn on my due date so there is proof of them drawing the money on the due date. Like many others have said, you are ok if it shows you are a few days past due b/c it has to be 60days past due for them to report negative info to your credit report. Good luck with everything. Hang in there, you guys! one month at a time and we call all eventually get rid of our student loans.

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Maximus June 30, 2013 at 4:04 pm

Looks like my Direct Loans got transferred/sold to Nelnet… hope the balance disappeared along the way :D

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Jen doe July 26, 2013 at 10:37 am

I worked as a student loan consolidation counselor a couple of years ago, a lot of laws ago too, and I too have heard nightmarish stories about Sallie Mae, Nelnet, Chase, JP Morgan and all the tributaries of her company. I just got my two consolidations transferred from Dept. of Ed. to Nelnet, a Sallie Mae baby and am nervous. Glad I found this page, eager to find out how everyone else’s transitions go too.

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Alex C July 3, 2013 at 11:07 am

Like several commenters here, I got an email from DL saying I was being transferred to MyFedLoan.org. They said I’d be contacted by the new servicer and the transition would be smooth. The new servicer did email me saying the same and that there would be a follow up email coming soon, but of course the follow up never came. When I contacted them the monthly amounts were slightly different and so was the length of repayment. The person on the phone attributed it to different “math” between Direct Loans and MyFedLoans, even though it’s a fixed interest rate (which should be a simple calculation).

A bigger issue for me was the auto debit snafu that came with that transition. I was on auto debit with Direct Loans, and when the normal monthly payment date came and went without a debit, I became worried. I have had a perfect payment history and didn’t want my credit blemished. I ended up contacting MyFedLoan and it turns out that it took them a month to get the auto payment stuff transferred over, and they automatically put a special exemption on the account so that the skipped month wouldn’t be reflected as a skipped payment (which was a nice courtesy). However, there would still have been a whole extra month of interest put on my account and each subsequent payment would be going to paying back interest and not principle. This was never explained to me and the girl I talked to didn’t even seem to understand what it meant.

I would caution anyone in a similar transfer situation to make sure that they follow up on this and submit the payment that normally would have been made, even if it wouldn’t reflect badly on your credit. That extra interest will add up in the end. Moreover, I had to call back and speak to a supervisor to make sure that the extra payment I made this month was applied to the back interest plus principle and not as an advance on the next month. That would have screwed up all of the following auto payments.

Ugh what a headache. I would never have pursued a graduate degree, if I knew it would make me an indentured servant of incompetent masters. I would advise people to not take it on faith that the education will pay off in the end (especially those pursuing architecture).

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Jon July 21, 2013 at 7:31 pm

Had the exact same problem and was unaware of the consequences of letting them do this. I’ll hopefully take the same route as you because I’d rather not pay what would amount to over $3000. Did you get an exact reason of why there was “different math?”

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Forrest July 3, 2013 at 7:20 pm

My loans were transferred to Sallie Mae a little over two weeks ago. Unfortunately the recently processed payment (same day! just my luck) was not transferred and Sallie Mae now claims the account is delinquent. I received my first unsolicited phone call this morning demanding that I pay up.

I had spoken to both DirectLOAN and Sallie Mae a few days before that. My payment was definitely processed but its going to take up to 3 weeks before Sallie Mae receives it from DirectLOAN. In the meantime it seems I am to be treated like a dead beat.

I don’t think there is any inter-department communication at Sallie Mae. One hand does not know what they other is doing. I wish borrowers had the right to choose their loan servicer. Its been two weeks – I’d trade Sallie Mae in for just about any other company. I was actually quite happy with my treatment by Direct LOAN :(

A sane policy would be to require that servicers put a hold on collection attempts until a full 30 days has passed since the transfer was initiated. This seems like business as usually to them, which is ridiculous.

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Cheryl July 13, 2013 at 1:39 am

Almost exact sentiment here. I had a horrible experience with Sallie Mae. In 2002 they hijacked my federal loans (without notice/knowledge/permission) and increased the interest rate from 3.15% to 4.25% and I lost all my perks like deferment, grace periods, etc. I fought Sallie Mae and refused to acknowledge them as a legitimate lender. Eight years and more than $17,000 in interest and collection fees later, I bit the bullet and consolidated with federal government (where they should have been in the first place).

Last night I got home from work very late only to discover a letter from Sallie Mae in my mail. My stomach sank. I thought I had dealt with and laid to rest that monster in 2010. Nope. The monster walks (https://www.youtube.com/watch?v=d-sALU_hveA) and my federal loans with it. In a letter dated July 3, 2013 (I received it on July 11 and payment is due July 14–they are up to their old tricks), Sallie Mae states: “We’re please to service your student loans on behalf of the Department of Education. Recently, the payment terms of your loans listed below have changed.”

I was happy with the Direct Loan Servicing Center. I was on the IBR program and never had a late payment. Sallie Mae is the worst case scenario. I wish my loans would have been transferred (if they must be) to anyone other than Sallie Mae. I would be jumping joy if my loans had been transferred to MyFedLoan.org (on anywhere else). It’s shocking that the federal government still gives contracts to those Sallie Mae crooks.

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TheGooch July 15, 2013 at 8:16 pm

My consolidated loan was transferred from ACS to Nelnet. ACS had been allowing me to defer the loan., which I was doing to free up cash to pay off my smaller debts first(debt snowball, smallest to largest ). I was 3 months away from paying off my other debts and start my last one, student loans, but Nelnet wants me to start paying now.

They don’t have the same deferment/forbearance options as ACS, and I don’t qualify for any of the ones that they have. Why aren’t the options the same?

I can still follow the debt snowball plan by paying the min on student loans until the others are gone. It would have been much easier to manage 1 payment instead of 3. >.<

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Cheryl August 4, 2013 at 12:14 am

UPDATE – Today, as expected, I received a notice from Sallie Mae that my payment is past due and that such information may be reported to “consumer reporting agencies” which it warns may “damage [my] credit rating and be reflected on [my] credit report.” But I previously contacted the Department of Education (because I feared this would happen) and was reassured that they had received my loan payment on July 11th.

In the letter received today, Sallie Mae also demands an immediate payment with a check made payable to “Sallie Mae.” What’s up with that? All my loans are federal and my checks have always been made out to the “U.S. Department of Education.” Ever since my federal loans were hijacked by Sallie Mae in 2002, I’ve been very wary of their ways. After all, it increased my principal by $17,593.49 more than $10,908.18 of which was in collection fees.

Avoid Sauron, I mean Sallie Mae, at all costs.

If you do have problems with Sallie Mae, or any other servicer, contact the FSA Ombudsman at 1-877-557-2575. If it’s a claim of fraud, file a complaint with the Inspector General of the Department of Education https://wdcrobcolp01.ed.gov/CFAPPS/OIG/englishhotlineform.cfm

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Sameasalways July 7, 2013 at 4:58 pm

My Subsidized Direct Loan was sold to “Cornerstone Education Loan Services” approximately a year ago without my knowledge, but the money kept coming out of my account. I was so confused and upset to realize this happened without anyone notifiying me. But now, a year later, I am even more upset. I received a letter today stating that “there has been a change to the repayment terms for some or all of your student loans. Please see the back of this letter for details ont he new terms.” When I look at the back, it tells me how much I owe, and that I will now be paying “$448.21/monthly for 8 months”. What? How? How can they change my loan terms? I am so confused and worried…I can not in any way shape or form afford that. I need a new car badly and work done on my car as it is and can’t afford either one, let alone a payment of 448.21/monthly.

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Kim July 9, 2013 at 8:34 am

My loan was transferred to Fedloans recently and my monthly payment increase by $3. I contact them to see why the change in monthly payment. The person I spoke to did not know the answer to my question. In the end, I was told that they did some calculation to make sure I would pay within ten years so they increase my monthly payment. I love how getting an education in the US is more of a punishment given how repayment is handle.

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Lisa July 9, 2013 at 8:52 am

Something that I’m not sure has been mentioned here – I had racked up at least 3 years of payments toward a “cancellation for public service” plan that DLS offered. I actually think that’s why they dumped my consolidation load. Now they don’t have to cancel it! Every time the government passes a new “relief” plan for student loans I’m pretty sure it only applies to DLS/gov’t. loans. So, we’re not just being screwed now, we’re being screwed into the future. Great. Even if my new servicer participates, will they dump me when I’m almost there, too? Is there no recourse for that? Is this legal? I’m not a lawyer, but are there any out-of-work lawyers out there who want to start a suit?

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Cheryl July 16, 2013 at 3:55 pm

Regarding the Public Service Loan Forgiveness (PSLF) program, you should request that your loans are serviced with FedLoan Servicing. Apparently they are the only servicer for PSLF (and they are non-profit). http://www.myfedloan.org/manage-account/loan-forgiveness-discharge-programs/public-service-loan-forgiveness.shtml

I’ve been dealing with education loans for some time and it does not make sense to have private banks and profiters involved in our federal loans. Based on experience, if there’s a profit motive, your rights will be ignored. Loopholes will be exploited and late fees, etc. will find a way of getting on your statements.

Look for servicing companies with .org at the end of their names. Write to your representatives and complain about government contracts given to servicers with a shoddy record. http://higheredwatch.newamerica.net/blogposts/2010/with_an_end_in_sight_whistleblower_lawsuit_reveals_truths_about_the_95_scandal-35559

Also, share your problems with propublica’s recent and ongoing journalism on this subject. http://www.propublica.org/article/student-loan-borrowers-dazed-and-confused-by-servicer-shuffle

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Daniel July 9, 2013 at 9:06 am

I found my $0 balance about a week ago, and had logged in the day of a scheduled payment. I promptly cancelled that payment, and took screen shots of everything, suspecting that something was going on… My big concern (other than the treatment many of you have been sharing) is that, being a teacher, I was going to be able to get up to $17,500 loan forgiveness (for teaching science in a low income school for at least 5 years – which is a big part of why I took the loans in the first place). I still have a few years left to go. Does anyone know if I will still be able to get the loan forgiveness?

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Daniel July 13, 2013 at 8:55 am

I just found out that my my loan was sold to Sallie Mae. As of now I am at a forbearance stage, however I have just started my career as a Teacher and was looking into some loan forgiveness programs for educators. Will this affect my eligibility for these types of programs?

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Shannon July 15, 2013 at 8:57 pm

From Sallie Mae to Direct Loans, and then sold back to Sallie Mae! I can’t believe I’m caught in this web of banking deceit with my student loans, when I barely survived the mortgage bubble bursting. Managed to cling to my home during the making home affordable joke (class action paid off 2k from Bank of America). I guess I need to find a lawsuit group to join on Sallie Mae. Jeez my payments went from $96/mth, to $148/mth, to $283/mth. I wanted out from Sallie Mae’s incompetent staff, and bully anctics. I thought Direct Loans was cake until they sold my loan back to Sallie Mae! These companies are not doing the right thing, and they should pay. Tomorrow, I’ll attempt to have Sallie Mae honor my agreement with Direct Loans. If they do not comply, then I’ll see my lawyer. I’m done being bullied and pushed around by bankers. Burying a jar in the back yard is starting to sound like good idea :)

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Cheryl August 19, 2013 at 2:24 pm

–Sallie Mae spent nearly 37.5 million on lobbying from 1998-2012.

–This year alone Sallie Mae has spent 1.2 million on federal lobbying to squash any kind of consumer protection legislation.

Apparently our representatives our listening to Sallie Mae rather than us. In other words, “Government of Sallie Mae, by Sallie Mae, for Sallie Mae.”

http://billmoyers.com/groupthink/what-to-do-about-student-loans/sallie-maes-profits-soaring-at-the-expense-of-our-nation%E2%80%99s-students/

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Esteban July 16, 2013 at 12:24 pm

My student loan was transferred to Cornerstone about eight months ago. I had no problems with Direct Loans. I made the payments and everything was good. Since the transfer, I keep getting notices that my payment has been returned by the bank. There are no fees associated with it, but it is annoying. Turns out that you can’t make a payment on the weekend. I finally had to call them to find out why this kept happening. You can schedule it, but it will not be accepted. I even made on one on a Friday and it was rejected too. These are accounts with plenty of money to cover the payments. I just don’t understand how they can’t go through. Maybe it’s just their way of trying to get me to sign up for automatic debit, but I won’t do that.

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Wesley July 16, 2013 at 3:28 pm

Hey Emily,
Yep, mines been transferred a few times. First to The Student Loan Corporation, and now it serviced by Sallie Mae. I’ve been happy with both so far, no hiccups during or after the transfers that I know of.

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Mark July 19, 2013 at 12:48 pm

My student loans account was through Direct Loan Servicing Center and it was recently transferred to Nelnet. My payments are due on the 7th of each month. For July, I scheduled it on the 5th since the 7th is a Sunday. I logged on my account on the 5th and checked the “My Payments” section to see that my payment was posted, but also to see that the remainder balance of 30k has been paid off. The following day, I got an email saying that my account has been transferred to Nelnet. My problem is my payment for this month and the transfer to Nelnet occurred on the same day without getting any notification. If I would have gotten a heads up, then I would have canceled my scheduled payment. I was finally able to access my Nelnet account last night and to my surprise, the payment that I made this month didn’t get applied to my account, but it was taken out of my bank account. I sent an email to Nelnet last night and didn’t get a reply and called today but was put on hold and I have no idea what the hell happened to my money. Has this ever happened to anyone and can give me any feedback? I recently was finally able to find a job, although I’m pretty much the lowest man on the totem pole and don’t make a whole lot. So, I’m just a broke college graduate who’s struggling with all my bills. All these college loans are horrible enough, but then these service providers just transfer loans without any notifications and don’t inform us what happened with our money.

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Linda July 19, 2013 at 6:18 pm

Wow I’m not the only one it seems! What I find unfair is that my loans were transferred without my consent from Direct Loan to Great Lakes. I was happily and easily making $130 payments a month. Then I got the bill from Great Lakes asking for $336 every second of the month! I’m sorry… but I have a car payment and rent due at the exact same time. When I called a few weeks ago to change my payment, they said that the lowest they could go for me was $247 a month. Although I’m still upset about that number, it’s way better than $336. However, there is still no change. I still see a “payment due” of $336 for August 2nd. What should I do? Is there anything I can do?

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Melissa August 16, 2013 at 1:15 pm

I got an email today from them, and I”m on IBR for $0 — ah, the life of an adjunct. I have no idea what they are going to do. And I was about to file the public service paperwork, as well, since I finally got the TT gig at a non-profit. Now what do I do?

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Ashley C. July 23, 2013 at 1:29 pm

Hello All. I was informed via email that my Dept of Edu loan would be transferred/sold from ACS to Nelnet within the past couple of months. My payment would’ve been due July 15th-17th (auto-debit) but the payment still hasn’t came out of my account – today is the 23d. There was a mysterious $0.00 credit to my account, a few days ago, however. I just created an account on Nelnet’s website. To my pleasure, it looks so similar to what ACS looked like when I would login to their site prior. I just called Nelnet and a polite young lady named Ashley answered. She spoke with her supervisor and it just appears that maybe I got lucky and the account was transferred to Nelnet right before that payment would’ve came out. It is not showing I have a payment due until mid-August now. Hopefully that July payment that was never taken out of my account doesn’t ever come back to haunt me. Anyhow. Just thought I would share my experience. It was a surprise that the loan owner changed, but so far it hasn’t cause me much grief. I signed up for all text-message alerts with Nelnet to make sure the July haunted payment never comes around to get me. Also, I was informed that I need to re-setup my Auto-Debiting now with Nelnet on their website. Easily done. Drum roll….. we’ll see how it goes! Good luck to us all!

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Mark July 27, 2013 at 11:39 am

That’s good that your July payment didn’t mess anything up for you. Unfortunately for me, $190.51 was taken out of my account when my loans was still with Direct Loan Servicing Center and it still has not been applied to my loans. So, right now I’m missing that amount and it seems like no one from either company can give me any answer as to what happened to my money. It’s really ridiculous.

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John August 2, 2013 at 8:32 am

I searched for my specific issue and did not see it. My loans were transferred to Fed Loan Servicing and my payments went up 78.19. From 976.85 to 1055.04. I sent a letter with copies of the USDE statements showing how much we were paying and got no response so I called and they said they recalculated it and I owe more now. Over the course of the loan that is almost 10,000.00 more I am paying back. There is noway this is legal. Anyone have any info on this?

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Matt M August 8, 2013 at 8:00 am

Here’s MY major complaint: When signed up for auto-pay with US Dept. of Education, I received a .25 reduction in my interest rate, as long as all the payments went through successfully… I also manually set the amount above the minimum to pay just above the monthly interest accumulation amount so that I would pay a bit on my principle.

Then the transfer…

Now I’ve lost the .25 reduction. Boo!! And then I realize my auto-payments were brought back to down to the original minimum set by the Dept. of Ed. So my auto-payments wouldn’t even cover the accumulated interest. Had I not double-checked I could have gone months with increasingly accumulating interest. Double-boo!! So I’ve uped my auto-payments to more than what they previously were but still am disappointed that I lost that interest rate reduction incentive to be signed up for auto-pay.

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KV August 27, 2013 at 3:07 pm

Glad and not glad to see this happening to others. My loan was switched from Great Lakes (which I liked) to Fedloan recently. I didn’t even realize my direct debit had stopped until I got a past due notice from Fedloan. In order to sign up for Direct Debit through Fedloan’s program, you have to pay postage to mail them an unsecured letter with all your banking information and your signature. Processing will take 2-3 months before direct debit can start, if they get the letter at all. How does that make any sense? Great Lakes verified my info electronically in 2-3 business days. I’ve also lost my 0.25% reduction because of the switch. If they can switch us so easily, why don’t we have the right to refuse or shop around ourselves?

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Olau September 22, 2013 at 11:02 pm

Thank you for this post and general comments as it addresses some questions I had about the loan transfer being administered by agencies that are completely incompetent. It seems that everyone is experiencing similar headaches with the processing and managing of their student loans. I’m surprised that there hasn’t been a news story or a bigger uproar about how frustrating this process has been for so many people.

As for my own frustration, my loan was transferred to FedLoan Servicing without notice. I was not notified several weeks later, just before my direct debit payment date. When I tried to contact the agency by message, they are slow to respond with the same generic message (effectively with no customer support) unless you call and press them, they post-date messages from when they are actually delivered, and their direct debit setup is beyond antiquated. It is exactly as KV describes.

In a letter I finally received in the mail, it mentioned that my previous direct debit setup with DirectLoan would transfer over. When I log in, the webpage shows that my direct debit is setup (albeit with a recalculated amount that did not actually carry over) with all the bank information inputted. Just in case the direct debit wouldn’t process, I setup a manual payment for the day before, which processed. However, when my direct debit payment date passed, there was no withdrawal from my bank account. In a call I placed before the payment date, the representative said that everything would be fine. Obviously, it is not, which means I’ll have to call again.

@KV: I’m curious, did your account also show that automatic payments carried over, and have you been able to contest the removal of the 0.25% rate reduction? My loan was transferred just over a month ago, and I’d hate to lose the 0.25% reduction.

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Cheryl October 22, 2013 at 8:50 pm

SALLIE MAE REALLY IS THE WORST — A new survey reports that Sallie Mae is the worst in borrower, school, and federal personnel satisfaction. http://www.consumerfinance.gov/blog/scoring-student-loan-servicers/

In fact, Sallie Mae is being investigated by the Department of Justice, federal banking regulators, state governments, and the Federal Deposit Insurance Corp. http://www.huffingtonpost.com/2013/09/24/cfpb-sallie-mae_n_3985330.html?view=print&comm_ref=false

As a result, Sallie Mae will be receiving the “fewest new loans to service in the upcoming school year.” Okay, so Sallie Mae is so bad that the government doesn’t think they should get any more new loans, but what about those of us who have already been transferred to Sallie Mae? I want to get away from Sallie Mae now more than ever. But how can I? If a store rips me off and lies to me, I go to a different store. By forcing me to have my loans serviced by Sallie Mae, the government is essentially forcing me to shop at a store that knowingly rips people off.

It’s not only undemocratic but it is unhealthy for capitalism to take away consumer choice. We should be able to choose our loan servicer. Apparently Salllie Mae can treat borrowers poorly, so long as they keep congressional representatives happy. That’s just wrong.

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Nayeli November 25, 2013 at 3:48 pm

I had made payments that were not transfered to Sallie Mae. I have called and told them this bc they keep sending me a bill for the exact amount I paid saying it is delinquent. How do I take care of that. I am pretty sure it is on my credit acore too. UGH!!

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Amy Lee Nude December 22, 2013 at 2:27 am

After I originally commented I seem to have clicked the -Notify me when new
comments are added- checkbox and now every time a comment is added I receive 4 emails with the
same comment. Perhaps there is an easy method you are able to
remove me from that service? Thank you!

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daniel January 19, 2014 at 5:37 pm

I was wondering if anyone had a similar circumstance or can offer advice. I should have been eligible for loan forgiveness due to me being a public safety officer. All the qualifications looked good for me..I’ve been in my profession for 14 years and have been paying my loans religiously since 1998. The catch all…the loans had to be direct loans and they were until last year when acs purchased them and guess what making me ineligible for forgiveness….imagine that..government programs are a joke because its a scam….when u get close they just sell them…huh…does anyone have similiarcexperience or any advice.much appreciated

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jennifer February 1, 2014 at 1:40 pm

Does anyone have an Edgeuation loan? I was looking for my tax form and can’t find their website. Very strange.

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Charlie @ Our Journey To Zero Debt February 10, 2014 at 9:15 am

I’m trying to increase my auto debit amount and when I tab out of the payment field and hit submit, nothing happens. Tried it a few times with multiple browsers.
What a pain!

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Joey February 16, 2014 at 7:53 pm

I have a similar concern that was posted above by Lisa. I had Direct Loans and was transferred to MOHELA in October of 2012. Everything was going fine, or so I thought, until I realized that I am no longer on the Public Service Loan Forgiveness Plan (PSLF), which I signed up for through Direct Loans in January of 2011, along with the corresponding IBR plan. I work in pubic education as a teacher at a state school.

In a panic, I contacted MOHELA to inquire about this. They said only FedLoans is currently servicing the PSLF plan and that I should submit a form for certification that my employer is in public service through FedLoans. But does this mean that the time I’ve been paying the IBR rate from 10/12 through now (2/14), the time that I’ve been serviced by MOHELA, will discount my payments on the PSLF? And what happens to the eight months I was on this PSLF plan through Direct Loans? Does it mean nothing now? Do I have to start from scratch? Or will FedLoans honor the past three years I’ve been on an IBR through a public service job retroactively?

I find this all mind boggling! I thought they had to honor the payment plan and the terms you were on from the initial servicing organization. I would call to discuss this, but it’s a holiday weekend… In the meantime, can someone offer insight and possibly appease some of my anxiety? Or prepare me for the worst? Or give me an idea of what I might say to whom? Does anyone have experience with something like this?

Thanks so much!

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yvette February 20, 2014 at 11:02 am

I had Sallie Mae and Nelnet then realized the total was the same for both. I questioned Nelnet because I paid off Sallie Mae and didnt want to pay for the same loan twice. Explained that to them and they told me it didnt matter because I signed a promissory note. Thats not right, paying it back to the govt is paying it back.

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Ray September 18, 2014 at 6:55 pm

You think that’s bad. Listen to this. I joined the army shortly after graduation in 2009. The army agreed to pay off my loans. First year army paid off first loan boom. Good deal. Next year I log into direct loans and see balance of 0. And the exact amount of payment with date and time. I assume army paid that plan off too.

Little did I know the loan had been transferred. No one contacted me in any way about this for two years. Two years! Then I get a letter from
Great Lakes. Yep that’s a lot of interest to pay off. I should have investigated more thoroughly. They were just sitting silent letting the interest accumulate. Bastards.

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