Is Your Student Loan Servicer Confusing You?

By Joseph Reinke, CFA, CEO of FitBUX

At FitBUX, we often hear of stories from new Members who were either provided incorrect information by their student loan servicer or are extremely confused by what they’ve been told.

This article is one example of a FitBUX Member who has Fed Loans and how they misinformed her…

The Situation

  • Melody graduated in May of 2017. Her grace period ended 6 months later and she entered repayment in November 2017.
  • Melody decided to change her repayment plan in early 2018 because her current financial situation changed.  She decided to go from an income-driven plan to a pay down strategy.
  • After she had been put on her new plan, her outstanding balance increased overnight by about $30,000. Yes, that is right. It increased almost $30,000 overnight!
  • Melody was a FitBUX Member and had purchased our Student Loan Tracking Solution.

What Fed Loans Told Her

Melody immediately called Fed Loans to figure out what had happened and the employee at their call center gave her the cookie-cutter answer: The increase was due to accrued interest that had been capitalized (ie. Added to the outstanding balance) when she switched loan repayment plans. Basically, telling Melody that switching plans cost her an extra $30,000.

When Melody contacted her FitBUX Coach and explained what Fed Loans had told her, her coach quickly pointed out that based on how much she owed it was mathematically impossible to accrue that much interest in a few months. If anything, the capitalized interest would’ve only been a few hundred dollars, not $30,000.  Her FitBUX Coach was easily able to see this because FitBUX was tracking her student loan repayment strategy.

So this was Fed Loans’ “mistake” #1.

Melody and her FitBUX Coach immediately called Fed Loans back and asked for a supervisor. The supervisor told Melody that the loans visible only to Fed Loans always showed this higher balance, i.e. the total balance included the “extra” $30,000 and that the change of plans had nothing to do with it. That supervisor, however, had no idea why Melody wasn’t able to see that higher amount on her end.

We will come back to this....

FitBUX’s Student Loan Tracking Solution

Melody was using FitBUX’s Student Loan Tracking Solution, one of FitBUX’s proprietary offerings, which helps recent graduates get accurate insights into their current student debt situation, makes sure loan servicers are doing their job correctly, and provide expert help to make sure you are implementing your repayment strategy accurately.

This is what happened:

Melody had linked her student loan accounts to her FitBUX profile by using FitBUX’s secure connection to the National Student Loan Database System (NSLDS). The NSLDS is the official record of all Federal student loans in the country and the source of the information accessed by Fed Loan (this is the data Fed Loans see's internally). So it was extremely (extremely) unlikely that Fed Loans and Melody were shown different numbers since they were all pulled from the same source…

Thanks to this direct connection to the NSLDS system, FitBUX is also able to access historical loan balances going back months. Looking at Melody’s balance over time, it became clear that the balance reported by the NSLDS over time never showed this “extra” $30,000 until the latest monthly report.

In other words, the claim by Fed Loans that the $30,000 had always been visible in their system was, well, “strange” at best, and the supervisor at Fed Loans saying they could always see it was false, i.e. this was Fed Loans’ mistake #2.

What Really Happened

Melody’s FitBUX Coach pointed out to her these discrepancies as well as the specific loans that had “Jumped up” in how much she owed overnight.

A few days later, Melody found out that her school never reported the extra $30,000 in loans to the Federal Government and overnight corrected their mistake quietly. They only told their students and former students after the fact, causing mass confusion.

We See This Daily

We witness loan servicers describing false information all the time. The point is: If you hear something that doesn't seem right or you don't understand what is being told to you, then its probably incorrect.  If it is correct but you don't understand why, you need to speak with someone that can explain it better... You need to understand the "Why" or you may potentially hurt yourself in the future.

We Can Help

We at FitBUX hear and witness stories like this all the time. If you need help with your loan servicer and/or they have told you something that doesn’t seem right, let us know. We’ve now helped students and new grads manage over a half a billion dollars in student loans and would love to help you as well. All you have to do is become a FitBUX member and schedule a free coaching call.

Also, as part of our Student Loan Tracking Solution, we have called various loan servicers with FitBUX Members on the line and have heard them either explain something completely wrong or give inaccurate information.

Young professionals manage over half a billion in student loans with FitBUX? Become a member today, it's free.

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