I just need to vent about my student loan servicing company – FedLoan Servicing. They recently took over a student loan of mine that was purchased by the Department of Education. Since taking over my student loan, I must admit that they are absolutely horrible. I have another student loan with Sallie Mae, and the difference in customer service and usability is incredible. Here’s my drama with FedLoan Servicing, and why I feel like FedLoan Servicing is a scam.
The Start of My FedLoan Servicing Drama
FedLoan started off poorly in the fact that I had to re-sign-up for all of the direct debit and online statements that I already had setup with the Dept. of Education. To make matters worse, there is a lag time of approximately two billing cycles before my direct debit would kick-in. Also, my student loan qualifies for an interest rate reduction if I sign-up for online statements. Well, I lost the reduction, and had to re-gain it after the transfer.
FedLoan Servicing Delinquent Notice
Next, after FedLoan confirmed to me that my direct debit was processed and I have a confirmation letter stating this, their payment system does NOT process my payment. I log-on to my account, and there are big notices saying “DELINQUENT!” I call FedLoan, and the clerk is completely ignorant and rude, and refuses to answer any of my questions. I call back, and speak to another clerk, who tells me that FedLoan has all kinds of problems with their payment systems, and that this happens all the time. I finally have to get her manager on the phone, who basically admits this without actually admitting it, and fixes all my problems.
FedLoan Payment Processing and Direct Debit
Finally, I had a payment pending for 2 weeks before it was credited to my account. If FedLoan is a loan servicer, then why won’t it process my payment! Furthermore, they have a pay-ahead program, which they call a safety net, but it really makes it difficult and confusing.
For example, if you have direct debit on your account, you would expect your payment to be withdrawn each month. Say it is $200. Well, if you make a stand-alone payment of $200, expecting to pay down more on your loan, your direct debit will not go through, since you already paid the minimum. Therefore, you really didn’t make an extra payment. You then have to manually make another payment. How ridiculous. My mortgage debits my account the same each month. If I make an extra payment, it makes no difference!
Fedloan’s business practices are shameful, and what makes them worse is that they are contracted by the United States Department of Education!
Be Aware of Potential Credit Problems Due to FedLoan
Remember, FedLoan is a loan servicer, and so they WILL report any delinquencies or other issues on your account to the credit bureaus (Equifax, Transunion, Experian). That can seriously impact your credit score. What’s worse is that they could be reporting false information, because the error was FedLoan’s and not yours. Realize that if FedLoan is telling you your loan is delinquent they may have also told the credit reporting agencies, and that will harm your credit score.
That’s why I urge you to check your credit score for free using Credit Sesame. They will also let you know exactly what is wrong so that you can go fix it. They have tools (like form letters) that you can use to send to companies like FedLoan and get them to correct inaccuracies in your report. The last thing you want is your credit score hurting your job prospects.
Read the Rest of the Story in Three Parts:
- FedLoan Servicing – The Horrible Saga Continues
- Why I Hate FedLoan Continued
- Getting Out From Student Loan Debt
Thanks for following along!
Note: This post was edited to clarify the payment practices. There is a lot of misunderstanding surround this program.