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US Department of Education / Faulty loan records!

1 PO Box 7202Utica, NY, United States Review updated:

I repaid my college student loan in one lump sum payment within the first year after I graduated and before any interest was due. 6 years later when my credit report was pulled i order to qualify for a home loan, it showed the loan as NOT paid and accruing interest! Since then, I have retained a lawyer, submitted copies of the original canceled check as well as all applicable paperwork and the US Dept of Education has not corrected this error. TransUnion, Equifax and Experian all told me/ my lawyer that the correction must be made by the US Dept. of Education Direct Loans people; that they cannot do anything until they correct the error.

1.) Make sure you save all of your loan contracts.
2. Make sure you save copies of all canceled checks / payments that you make FOREVER.
3. Don't accept a loan from the US Dept of Education/Direct Loans. It's not worth the "price" you will pay for the rest of your life...

Ma
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Comments

  • Sc
      5th of Mar, 2008
    -1 Votes

    How much did you pay in full (PIF) account? Was there two US Department of Education loans? Did you settle in full (SIF)? Are you sure you didn't PIF the wrong amount? You and your lawyer need to contact customer service and express that you have proof where you PIF (or SIF whichever is the case). And why wouldn't you see on your credit file that it was unpaid? Don't you run your report EVERY year? I'm not saying it's your fault, but if you caught it earlier then it could have been resolved way back then. I would make sure that the Department of Education corrects the error as soon as possible.

    Pablo.

  • Ka
      24th of Oct, 2008
    0 Votes

    I processed paperwork with Direct Loans for a POSSIBLE consolidation - because they refused to give me accurate numbers without an application. As it turned out, Citibank was willing to give me a better deal if I stayed with them. Though I called Direct Loans to stop the consolidation, they processed it anyway. I received a letter from them stating that the consolidation would go through within 10 days of the date of the letter sent - only I received it 3 days too late. When I called them, they showed no record of my phone call (though my phone records prove that I did call) and refused to stop payment on the check that they had sent. I will now end up paying them $8, 000 more than I would have paid Citibank by the end. Their business practices are deceiving and illegal - but is it worth the cost and headache of a legal battle? I'm still undecided on that, but I can tell you this: ABSOLUTELY DO NOT CONSOLIDATE WITH DIRECT LOANS!!!

  • An
      18th of Nov, 2008
    +2 Votes

    same thing happened to me. they used phoney names as reference, and told me I had to sign. when I refused, they made my paid bill into 14, 000. the loan has been paid, and it is 30 years since I took out 4, 000. again, it is paid, and they applied interest on what I didnt owe.
    I will retire this year, and my s.s. check is below what they can take. finally I will be rid of them. I did contemplate suicide at one point as I have no money for medical bill, so what is th epoint of living.

  • Su
      9th of Feb, 2009
    0 Votes

    I to was forced to sign or go to jail is what they told me in 2003. Admitted the original student loan one for $2, 500 was supposed to be dismissed in 1988 due to me being homeless, no income, zero. Lawyer filed it incorrectly, though the judge approved under my hardship. In 2003, again phoney names, I was in a domestic violence relationship and anything they said I would have signed, to save the fall out with my ex at the time; most of all, I was trying to get out and find a place for my kids. NOW, they want me to make payments and do not base it on my living expenses, eg: my rent and three children, nope, strictly off the gross. I cannot afford this and they will not listen. Every time I get off the phone I am so distraught that I truly feel like quitting my job and living in my car, again; with my children and collecting food stamps; than to attempt to make things right, and they do not make them right.

  • Ha
      19th of Feb, 2009
    0 Votes

    Their customer service quite frankly, sucks. In fact they are anything but customer service. I mailed a payment to them that was improperly credited and I get treated like a villian. I asked the lady for her name and she said Mercedes, I then asked for her last name it all I got was an H. Mercedes H. I then asked for her supervisor's name, and she was not allowed to give that out, I then asked for an employee number or badge number and again, nothing. Pathetic.

  • To
      21st of May, 2009
    +1 Votes

    The same thing has hapened to me, constant threats of garnishment. when i offered to pat 250 per month they demanded 500.

    Asked for a loan consolidation, I now owe three times the value of my loan, the consolidation was done without my written consent.

  • Se
      12th of Jun, 2009
    0 Votes

    I have been dealing with the misplacing my payment for 4 months now. I provided them proof of payment from their own merchant bank and they continue to tell me they are still investigating. I would really like to know what recourse we have since talking to them doesn't work.

  • Ry
      16th of Jul, 2009
    0 Votes

    Gosh after reading the post. I am scared. I have had my share of run in with the customer service reps. They hang up on you, you can't question them and everything on the computer that sits in front of them is correct and can not possibly be wrong. Just today I called about the consolidation loan and the servicer hung up on me because I was questioning her and she couldn't answer my questions. When i called back the new rep said there were no notes that I had called. I asked to speak to a supervisor and I was put into a voice mail. lol I bet though that no servicer is good. I know AES gave my information to a lender I had nothing to do with and claims it was a mistake but they never sent a letter or anything apologizing. I could go on and on. I thought the democrats would have restored full consumer protection but I don't think they care as they (republicans too) are in bed with the student loan industry. I believe that if full consumer protection rights were restored that these companies would be better to do deal as they could be sued if they violated consumer protection laws. As it stands now these companies have cart blanche to threaten and do anything it takes to get blood from a turnip. I think the only thing they can't do is send someone to beat you up. But, if they could they would not blink twice to send someone to rough you up. sigh...

  • Em
      1st of Oct, 2009
    +1 Votes

    OMG, wish I had seen this before I started my consolidation nightmare with them. I've been trying to consolidate my loan with Direct Loans since July 1st when the new interest rates came out. The process was only supposed to take a couple weeks I was told but Direct Loans kept sending payoff requests or whatever to my original lender (ACS) at a wrong address. After calling between the two lenders for weeks, I finally got Direct Loans to fax whatever they had to to ACS so I could consolidate. Direct Loans says they mailed off the payment amount September 14th but ACS never received it. I'm afraid Direct Loans mailed the pay off amount to a wrong address again. Now both lenders are claiming they have my loan and I need to pay them. Both have agreed to put my loan into forbearance until this is figured out. I asked Direct Loan customer service if they could try and figure this out. They said no! Is it really my responsibility to hold everyone's hands through this? I filed the paperwork and they should do the rest. That's how I feel. So I don't have a loan to pay for the month of October and with the incompetence Direct Loans has shown I doubt I have to pay anyone for a while.

    Also, Direct Loan customer services is the worst! While I've been talking to them about how long it should take ACS to acknowledge that they received the payment I've been told 3 different times. First it was 7-10 days, I then told them it's been over that so they said 15 instead. I change customer service reps and was then told it could take 30 days!

  • Sh
      15th of Dec, 2009
    0 Votes

    I paid off my loans years ago. Since then I cleaned out my files. Several days ago my sister recieved an overdue payment letter at my old address. Direct Loans claim I had an outstanding balance of 1350, interest of nearly 300 and collection payments of more than 400. They claim they have corresponded with my sisters address. First they claimed ten times, later they said three times, however, they only sent a letter in June this year followed by a further two. If I owed so much money, why didn't they contact me sooner, expecially as my last payment was in 2006. When I phone direct loans they only process my call to a voicemail which says I must deal with the collection agency. The agency says that only direct loans can give me a history of the repayments. I have been asked to tender prorf which I foolishly threw out. As I have lived overseas for years I made my repayments via interenational money orders. I really don't what to do. Can alnyone help me and can I say to anyone thinking about a lend from direct loan. DON"T DO IT!!!

  • Br
      26th of Jan, 2010
    +1 Votes

    If you remember the movie "Beetlejuice" and the hellish bureaucrat, this is the US Department of Education. It is a hellish beast that devours anything and everyone. For those that haven't taken out a student loan, RUN, don't walk, but run as far as you can from the student loan business.

    I firmly believe that anyone that works there has already died; and this is THEIR hell, to make life hell for the rest of us.

  • Do
      25th of Jun, 2010
    0 Votes

    I am dealing with them now. I make regular payments ahead of schedule and they do not apply them correctly. With other lending institutions they apply my payments first to the unsubsidized loans then to the others only after it is paid off. With Direct Loan, they apply my payment so it best benefits them and I continue to rack up interest. I have to call them now after each payment and request it to be reapplied to the unsubsidized loans. This is such a huge waste of my time. It also goes to show you how two-faced they can be. Pretending like they really care about us students then stabbing us in the back. If my wife and I didn't keep these companies in check we would be throwing our money out the window.

  • Dn
      13th of Sep, 2010
    0 Votes

    I agree w/ Donnie 1987 - DL does not want you to pay off your loans early and they do everything they can to stop you from paying off the unsubsidized part first. I took out the full loan amount for school. I would take the extra and apply it back towards the unsubsidized loan portion and then continue to pay monthly payments. I tried posting electronically and they would take half off of the unsubsidized portion and half from the subsidized. Why would I want to pay that part off if I'm still in school! I called and they told me to e-mail after the payment went through and tell them where to direct the payment. I did this every time and it worked for a while. Then the payments stopped getting applied correctly. So then, I started sending in a check w/ a very specific letter wrapped around it (which is what DL customer service told me to do!) that said to apply it to the unsubsidized portion only. I noticed that wasn't working either and when I called in - they told me this time that, no that way doesn't always work either and I would have to call in every single time. So this means if I want to make a monthly payment I have to remember to call in every month after the payment has been processed. So much for their "easy" online payment system. This is just a way to trick students into paying more interest in the long run. I completely agree that Direct Loans is just another way to scam a vulnerable population in the name of "helping students". And, like others have advised, keep records/track of everything!!

  • He
      18th of Sep, 2010
    0 Votes

    Emil Georgi I have had the SAME problems between ACS and Direct Loans. DL sent me a letter on 5/21 that my loan had been paid off at ACS and to start paying them. I got a letter from ACS saying I was 119 days late recently and I hit the roof. Apparently Direct Loans was sending my consolidation check to a different department of ACS, so ACS was sending it back . Then they had to re-send it and them meantime BOTH places were saying the other was wrong and I needed to pay them. They wanted me to get a deferment or a forebearance and I refused. Those are for hardship problems, and if I truly need one some day because of a hardship, I want to be able to use it then.

    Due to accounting error between the two of them, this has damaged my credit. I was told by ACS that they could do nothing about it because they never received the money in May, so they couldn't undue the damage to my credit. My best advice to you, is what I intend on doing which is contacting the Ombudsman at the Department of Education. They are not an advocate for anyone, they are there to hear both sides of the story and make a fair assessment of the situation and suggestions on what should be done. Kind of like a mediator. I have attached their website http://www.ombudsman.ed.gov/

  • Go
      24th of Oct, 2010
    0 Votes

    So how do we sue these [censor]? I think a class action lawsuit is in order! I called and told them I DID NOT WANT TO CONSOLIDATE with them and was told I'd have to call back once my paperwork was finalized! I told them to notate my account and the person said they would. I then called my lender and told them to notate my account. They said they would. I just got the letter...too late! While it was delivered about 7 days prior to the deadline, I was in bed sick and didn't get my mail. I checked online and it said they consolidated on Oct. 21st. It's Oct. 24 (Sunday). I sent an email to them and to my lender in hopes of stopping this CRAZY game!!! I checked my lender's account and it doesn't show ANY PAYMENT AT ALL! Sooooooo, I'm crossing my fingers and hoping for the best! Say a prayer!

  • Jo
      29th of Oct, 2010
    0 Votes

    I just went thought the process of trying to consolidate my loans from Mohela to Direct loans. I filled my application and Mohela sent Direct Loans my paperwork for payoff the two weeks later. Direct Loans said they never received anything more than a month after Mohela sent it. I requested it sent again. Well my loan was never process and dropped they my application. I called repeatedly and they refused to let me speak with a manger. The government has taken over the student loan business and they are screwing everyone over. They are never wrong and get an attitude with you on the phone. I can’t wait to pay off the one Direct Loan I have and never deal with them again. I have sent emails to all my Congress and Senate members about my ordeal with Direct Loans. After reviewing this I’m so glad I didn't consolidate with Direct Loans.
    Please send all you Congress and Senate your problems. If they do not hear you they will figure everything is work well.

  • Le
      31st of Oct, 2010
    0 Votes

    This have not happen to me yet but, I have the same loan from my school.. So I know what to look ahead for.

  • Br
      4th of Nov, 2010
    0 Votes

    I am a former analyst (for 7 years) for Direct Loans, and even though there are quite a few idiots that take phone calls at the call centers there I feel the need to clarify a few things in regards to some of the comments on here. If I was the one who received any of these complaints, I honestly wouldn't have taken most of these seriously due to the fact that it was something that YOU did, simply do not agree with, or may not even be possible in the first place. Also, don't bother attacking my credibility or saying any of this is wrong because I don't care. I'm not trying to flame anyone or start a debate, just to state the facts so some of you might get a better understanding of things.

    First of all, forget anything you know about other lenders when dealing with Direct Loans... any other federal loans are under the FFEL (Federal Family Education Loans) program. These loans are federally guaranteed loans underwritten by a private bank. Direct Loans are loans that are borrowed directly from the US Government, hence the name. Because of this, Direct Loans has no incentive to rack up extra interest charges for you because they don't see a penny of that money - it is basically numbers on a screen since Direct Loans is actually a student loan SERVICER, meaning they maintain the accounts on behalf of the government and is only paid a flat fee government contract. The money is lent from and repaid to the US Treasury. This is also the reason it takes a while to get a refund... Direct Loans cannot automatically refund it back, they have to send a specific request to the US Treasury. This is also the reason any refunded payment is issued as a US Treasury check (the same type of check you would receive for a federal tax refund.) Direct Loans also has no power to set any policies regarding the loans... every single policy is handed down from the US Department of Education and approved by Congress. Feel free to start that letter writing campaign informing your congressmen about the policies they voted to approve. FYI, this is the same congress who tried to eliminate the corporate welfare aspect of student loans and actually ELIMINATED the FFEL program effective with the 2010-2011 school year. Yep, that means any new federal student loans taken out are Direct Loans and have the same terms and conditions.

    Kayla - there is no such thing as a "possible consolidation." If you filled out paperwork, what you filled out was a consolidation application that you obviously didn't read. Also, to the people saying that Direct Loans is sending payments to the wrong address.. the payment address that consolidation payoff checks are sent to is also obtained directly from the borrower when you submit the consolidation application so if it was sent to the wrong address it is your fault for entering incorrect information in the first place. If you want to dispute fraud, feel free to call the customer service department and ask for a copy of your Promissory Note that has your signature on it and they will gladly send it out. If you submitted an application online, you can even view it at www.loanconsolidation.ed.gov and look at the information you submitted and agreed to along with the timestamp of exactly when it was submitted.

    There is also no such thing as a "forced consolidation." What it sounds like several of you are referring to is consolidating a loan out of default, meaning that your loan was with a collection agency, just as it would be if you didn't pay any other bill. When you do this, there are collection costs and a default fee charged by the original lender (up to 20% in some cases). To get a loan out of default you can either pay it in full or do one of two things. The first would be to rehabilitate the loan, which means you make a certain number of consecutive on time monthly payments (usually 9). These payments can be high, but the only reason you defaulted in the first place is because you chose to ignore the loan for at least one year. If you do rehab your loan, all collection costs and fees are removed from the account and it is reinstated to the loan balance as of the day it defaulted. The other option is to consolidate the loan out of default, which basically means that you refinance the loan and Direct Loans buys it from the collection agency for the current balance (including the collection costs). This would explain why there was a significant increase in your balance.

    Donnie - see above about FFEL loans vs. Direct Loans. Direct Loans policy is to apply any payments first to interest, then divided among active loans based on the balance of each loan. You can request any amount that has been applied to principle to be applied to the unsubsidized portion of one loan, but you do have to request this each time. I'll admit this is an outdated system to apply payments, but the reasoning behind this is that a student loan has disbursements for each semester you are enrolled in school (some unsubsidized, some subsidized) and it is not uncommon for one student loan to have 20-30 disbursements. If you mail in a payment with your normal payment coupon, that payment coupon is saying to apply it to your account in general. If you attach a specific request to have it applied to the unsub balance it will be, but it takes about 7-10 days to process. PLEASE DON'T BE IGNORANT AND SEND IN BOTH A PAYMENT COUPON AND A LETTER. When you do this, you are giving conflicting instructions and your payment will likely only be applied to the entire account.

    To the people complaining about missing payments I am really not that surprised. We would receive well over 1000 checks/money orders/electronic bank bill payments every single day that didn't include a statement or enough information to apply them to an account, or it was sent to the wrong address (HINT - YOU SHOULD ONLY BE SENDING PAYMENTS TO ATLANTA, GA.) This is especially sad because we can find any account with the just the borrowers name and zip code within about 30 seconds. Therefore, if you change your address or name, update us with the correct information and don't use checks that have an address printed on them from 10 years ago. If you send a check from the account of a person with a different last name than the borrower and no other account information, the chances of that being applied to the correct account are slim. Per federal regulations, these checks are cashed whether we can find the account or not. If we can't find it, the funds are placed on hold at the US Treasury waiting for someone to call in and claim the payment. If you are missing the payment, call customer service with your checking account number/routing number, the name on the checking account, the check number, amount of the check, and the date the check cleared your bank. The phone rep should then submit a request to find a missing payment to another department. If we have that information, it takes about a minute to find any payment ever received by the US Treasury for Direct Loans. If it isn't found by this request, then we weren't the ones who cashed it.

    Another thing, don't bother [censor]ing about your payment amounts or interest accruing because there isn't much Direct Loans can do. The average middle school student can probably explain how a loan works (you get money to pay for something now, you pay it back later with interest), but many college educated people can't or just feel like the basic principles of finance do not apply to them. A regular payment is calculated based on what it will take to pay your loan off in a certain time frame, including the interest that accrues. This information is available before you even sign for the loans by calling and getting an estimate or being doing a little math yourself. Still, if you can't afford your payment as calculated this way, you can switch to a plan based on your income. These plans max out at 15% of the difference between your adjusted gross income and 150% of the federal poverty guidelines based on your family size. After 25 years, if it still isn't paid off the remaining balance is forgiven. If you can't afford this payment, then you aren't living within your means in the eyes of the government and gives you the alternative of forbearance, which means that your payments are put on hold for up to a year at a time but interest still accrues. The government currently allows you to do this an unlimited number of times, so under the current regulations you really don't have to pay your loan back if you feel you can't.

    That is all.. hopefully a few people are a little less ignorant now...

    Brandon

  • Ju
      23rd of Nov, 2010
    0 Votes

    Received a bill yesterday from Direct Loans saying that I was 3 payments behind. I pulled up my bank's online history of their bill pay service (thank GOD for this!!!) and verefied that DL people are, in fact, high.
    The first computer mule I spoke with told me that I was 8 days late for November (they withdrew funds over a week ago... so no, I'm not 8 days late). Then she told me that I owed 2 payments, not 3. I counted the transactions on my bank account. It's November. I counted 11 payments made to Direct Loans this year. So...no, that wasn't it. Then she told me that I had just skipped August all together. Again, I have made every payment this year on time. Clearly, this person couldn't even read the computer screen in front of her and couldn't give me a solid, substantiated answer to save her life as to why I owed her 3 payments (or was it 2? She just couldn't decide on a final answer, except to state that she was right). I asked for her supervisor. The supervisor hopped on the line and I read the date of every single payment that had posted to them this year, but she refused to back down. Upon going back further, we realized that I had missed a payment 16 MONTHS ago (for $50). I was fuming at this point. A) It's a clerical error on my part that I'm happy to rectify. B) This lady had the nerve to tell me that I should be more responsible in responding to their correspondence.

    First of all, I called them the minute I opened that letter. Second of all, all their contact info (address, email, phone #) was correctly verified when I first called, yet they had some random address that I had never lived at where they were sending mail (mind you, I updated my billing address when I bought my house over a year and a half ago... like a RESPONSIBLE PERSON and that letter seemed to magically appear in my mailbox out of nowhere yesterday). None of this makes sense. I did not appreciate being berrated over something so stupid that took them 16 months, an idiot at a call center, and a supervisor to figure out.

    I am honoring my obligations to the loan I took out and do not deserve that kind of "customer service" from some bureaucratic science experiment gone awry.

    Direct Loans, train your call center people to give basic, CORRECT information. Here's a start: "Ma'am, it appears that you have missed a payment in July of '09. How would you like to take care of this?" Make sure your automated system states WHY you want money from me (not just "you owe us 3 payments. Thanks", which was incorrect.). Make sure that when someone updates billing information with you guys, you send mail to that updated address (which you CLEARLY had on file because that's the address you provided me when I first called. Idiots.). It's sad that you people have to be babysat like this just to get my $50 a month. What a PIA.

    On the other hand, this just further re-inforces what a great idea bill pay services through your bank are. I can clearly see that I in fact missed a payment. I caught this before the computer mules at the call center did.

    But telling someone they owe 1, 2, or 3 payments (and not knowing exactly how many) without an explanation and calling them irresponsible? Get it together.

  • Le
      23rd of Nov, 2010
    +1 Votes

    Well, I see what I am in for. This is not good, I can not believe how these people are just out to take money like this, this [censor] is none sense to me. Well, GOOD LUCK to you, because by hearing what just happen to you about your loans, I do not have a FREAKING CLUE about what will happen to me. I guess the best thing to do is stay on top of your game with this kind of [censor], because if you don't you are in for a big problem.

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