Tuesday, December 21, 2010

Names can be confusing – especially when it comes to student loans.

A Rose is a Rose is a Rose … Names can be confusing – especially when it comes to student loans. You thought you paid that loan yet you are still getting late notices! What’s going on???

The student loan industry is still undergoing monumental changes that can be confusing for student loan borrowers. Even though Direct Loans became the single source for student loans as of July 1, 2010, life is not necessarily simpler. Direct Loans is now using several private companies to service their student loan portfolio. You may think of Direct Loans as your lender but they probably will not be the company servicing your loans. As of December 2010, in addition to the original Direct Loan Servicing, there are now four additional servicers who are handling student loan accounts for the Direct Loan Program. They are:
· DOE/Great Lakes
· DOE/NelNet
· DOE/Sallie Mae
· FedLoans (also known as PHEAA or AES)

It is important to understand that these DOE servicers are separate companies from their FFELP counterparts, with separate mailing addresses and phone numbers. They all also service loans under the FFEL loan program so you may have other student loans handled by Great Lakes, NelNet, Sallie Mae or PHEAA (AES). You may have the phone number for this servicer programmed into your speed dial. However, as separate companies, the DOE/servicer will have separate phone numbers and mailing addresses. Now that I have probably confused you, let’s review a few situations and see if we can help make your student loan life a little easier.

First Scenario – you thought you had a handle on who had your student loans; now, you called your servicer and they no longer have your loans. Yikes! Where are they? What’s going on? There was a large volume of FFELP loans that were sold to DOE in October 2010. This resulted in a lot of loan movement for borrowers. The good news is that this was the final loan sale authorized under the PUT program. However, as other loans were sold under the PUT program over the last few years, borrowers often went from one FFELP servicer to two or more DOE/servicers. Something simple became very bewildering. The DOE (Department of Education) has recognized the confusion created by this program and they are in the process of re-sorting their DOE/Servicer accounts to group all of a borrower’s DOE accounts to one DOE/Servicer. This may result in some additional, initial confusion as the loans are sorted and reassigned, but the DOE assures us that this process should be complete by mid-January and all borrowers with Direct or DOE held loans will have their loans serviced by one servicer. Happy New Year!

Second Scenario - you thought you were paying those loans and yet you keep getting a late notice or calls about delinquent loan payments. There are two possible answers to this scenario. The quickest and easiest explanation is that you have a loan or loans that were recently sold to another servicing company. Contact the company at the phone number referenced in the letter to see what is going on. You should be able to resolve this fairly quickly. The slightly trickier and more common problem occurs when you have loans serviced by both the FFELP servicer and the DOE servicer. For example, you have loans with Sallie Mae and you are making payments; however, you are getting letters from DOE/Sallie Mae saying you are delinquent. You must remember that, even though the names are similar, your loans are being serviced by two different companies. To resolve the current situation, call DOE/Sallie Mae and get a solution in place (payment, adjusted payment plan, deferment or forbearance). Our Tip for Future Contact: If you have the dual servicer situation, make it a habit to always contact the DOE/servicer first. This is based on a provision regarding federal payments, “lockboxes” etc. It can be confusing, but if you will simply get into the habit of contacting the DOE/servicer, you may still resolve your dual serviced student loans with one phone call. The customer service representatives from the DOE side are allowed to discuss both sets of accounts with you; however, the customer service representatives from the FFEL side are not allowed to discuss the DOE accounts with you. So… if you contact your FFELP servicer first, unless you ask to be transferred to the DOE/Servicer, you will have to call back to resolve those accounts.

Resources for Student Loan Management
A student loan borrower’s best source of student loan information remains NSLDS. The website, http://www.nslds.ed.gov/ will provide you with the most current information on all of your student loans and can be easily accessed 24/7 with your PIN. (Our Tip: If you have forgotten your PIN, visit http://www.pin.ed.gov/ and request a duplicate PIN). If you receive any mail from a student loan company, always open the mail and read the information. Trust me, in today’s economy, a company is not going to go to the expense of mailing letters or making phone calls (even “robo” phone calls) without a valid reason. As the borrower who can potentially be negatively impacted by adverse actions on student loans, you cannot afford to ignore any correspondence regarding your student loans. If you do not understand the information, either contact the customer service number listed on the letter or contact your school’s Financial Literacy department for assistance.

Each DOE/Servicer has a website where borrowers can download forms, review their accounts, make payments and request payment relief assistance. If you are a SWFC student or alumni, you can contact our financial literacy department and we will be happy to help locate your servicer’s website and set-up your account for easy management. Just e-mail me, mjoffe@swfc.edu and I will be happy to help.

Here is one final tidbit for your consideration. The Department of Education is reaching out to student loan borrowers and they have added two trendy contact resources for borrowers. Check these out:
The page features weekly tips, info and links for future, current and former students.
www.youtube.com/collegedotgov This site features more than 60 videos, inspirational videos from peers and advice from current college students.