From the issue dated August 10, 2007
Nonprofit Lenders, While Helping Students, Help Themselves
Questions arise as Congress considers giving the state-based agencies an advantage over their competitors
By PAUL BASKEN
Janice Frazier, a 56-year-old single mother in Silver Spring, Md., has been struggling to pay back a $7,000 loan that she used to help her daughter attend Tufts University.
The nation's largest lender, Sallie Mae, spent six years ignoring her attempts to negotiate its share of the debt and win a deferment on medical grounds, Ms. Frazier says.
But the Pennsylvania Higher Education Assistance Agency, a nonprofit lender known as Pheaa that is run by the state and operates nationally, was even worse, she says.
"Eventually I had to begin sending everything certified mail and even had to file a complaint with the Better Business Bureau of Maryland to get AES [Pheaa's commercial arm] to admit they received my fifth deferment application and actually grant me a deferment," says Ms. Frazier, who now owes more than $15,000 from additional interest and fees. (Spokesmen for both Sallie Mae and Pheaa say they take care to resolve customer complaints but cannot comment on the details of Ms. Frazier's case, citing privacy laws.)
Despite some complaints about the practices of state-chartered lenders like Pheaa, lawmakers are looking to encourage their growth as Congress and the states tackle problems of corruption and profiteering in the student-loan industry.
There is little dispute that the nonprofit lenders are more generous with their income than are their for-profit counterparts. Pheaa earned $191.5-million last year, and gave 91 percent of that back to students in such forms as grants, scholarships, and educational programs. Sallie Mae earned $1.2-billion and donated about 1 percent of that through its charitable arm.
Less clear, however, are other benefits that nonprofit lenders might provide individual borrowers and taxpayers. Many use the same aggressive collection techniques seen at for-profit lenders. Some spend lavishly on executive salaries and vacation-style conferences. Some have relationships with for-profit partners that let those companies siphon off profits.
And many nonprofit lenders lobby alongside their for-profit counterparts in support of the federal government's bank-based system of student lending, despite lawmakers' arguing that the less-popular alternative — the Education Department's direct-loan program — is cheaper for taxpayers. Those efforts have some college and student lobbyists wondering if the nonprofit agencies deserve extra breaks from the federal government.
"I applaud them for whatever good they do at their own cost," Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, says of the nonprofit lenders. "When the good they do is at our cost, maybe we ought to decide what good needs doing."
A Reward From Congress?
Congress doesn't appear to share that concern. A budget plan approved last month by the U.S. Senate would cut the federal subsidy to lenders in the bank-based loan program by 0.5 percent. The plan would cut nonprofit lenders' subsidy by only 0.35 percent.
The House version would cut subsidies for all types of lenders by 0.55 percent but give the nonprofit agencies additional fee breaks that would create an advantage similar in size to that of the Senate bill.
The chairmen of both the House and Senate education committees, Rep. George E. Miller, a California Democrat, and Sen. Edward M. Kennedy, a Massachusetts Democrat, respectively, declined repeated requests to explain why they support the breaks for state-run lenders.
"A number of committee members on both sides have effective nonprofit lenders in their states," says Melissa Wagoner, a spokeswoman for Senator Kennedy, "and it was important to those members that the Senate bill recognize them."
Others, including some traditional Democratic allies on student lending, do not agree. They point out that the nonprofit lenders are already exempt from paying income tax, and they can issue bonds that are tax exempt, both of which give them advantages over for-profit lenders.
"It doesn't make economic sense to provide them yet another extra subsidy," says Robert M. Shireman, a former education-policy adviser in the Clinton administration who founded the Institute for College Access & Success, an advocacy group in Berkeley, Calif.
Giving nonprofit agencies more money "to do the same job as more-efficient for-profit lenders," says Mr. Nassirian, "is not only economically illiterate, it sets the stage for whole new round of waste, fraud, and abuse."
100-Hour WorkWeeks
Congress is reacting in part to such incidents as the estimated $225-million that Sallie Mae has paid its chairman, Albert L. Lord, since 1999; the discovery that several college student-aid directors as well as an Education Department official were holding stock in a for-profit lender, Student Loan Xpress; and the corporate giveaways at events like the annual conference of the National Association of Student Financial Aid Administrators.
But some of those same activities, albeit on a smaller scale, can be seen among nonprofit lenders, who hold about 20 percent of the federally guaranteed student-loan market.
Tony Hollin, as chief executive and chairman of Educational Funding of the South, a nonprofit student-loan company based in Knoxville, Tenn., and known as Edsouth, collected more than $1-million in salary in both 2003 and 2004, according to federal tax filings.
Edsouth, which says it is the nation's 13th-largest holder of student loans, paid Mr. Hollin $570,461 in 2004, when he reported working 50 hours a week, according to the IRS Form 990 filed by the company. That same year, he was paid $540,000 while working 50 more hours a week as president of Educational Services of America, an affiliated Knoxville-based nonprofit agency that helped manage student loans.
Mr. Hollin also received more than $1-million from the two companies in 2003, also while reporting 50-hour-a-week duty at both jobs. Mr. Hollin left Edsouth after a corporate reorganization last year, becoming chairman of two for-profit companies, Edfinancial Services and Edamerica, that had been part of Educational Services of America.
The reorganization was designed to shed a part of Edsouth that "was a very commercially oriented activity," says Edsouth's president, John E. Arnold Jr. "That salary is not here any more, I can assure you that much," Mr. Arnold said of Mr. Hollin's compensation.
The tax filings also list Mr. Arnold as working a combined 100 hours a week in 2004 — or more than 14 hours a day, seven days a week, all year long — when he collected more than $300,000 from the two nonprofits. "I probably did, yes," work that many hours, Mr. Arnold said. He said he now averaged about 12 hours a day, "not including travel time."
In other cases, nonprofit lenders help outsiders enrich themselves. A leading example is Sallie Mae's relationship with USA Funds, a loan guarantor staffed mostly by Sallie Mae employees. USA Funds enjoys nonprofit status, yet pays $250-million annually to Sallie Mae, according to USA Funds' tax filings.
The nation's largest nonprofit holder of student loans, the Brazos Group, of Texas, pays for the services of a law firm owned by the president of Brazos, Murray Watson. The fees that Brazos pays for legal services are determined by an independent consultant, "who told us the high, the medium, and the low on legal fees," Mr. Watson said. "And we try to stay below whatever the medium fee is."
The nonprofit lenders also have annual gatherings with vacationlike elements at a time when the National Association of Student Financial Aid Administrators, under political pressure, is scaling back its meetings.
The Education Finance Council, which represents many of the nation's nonprofit and state-chartered student-loan companies, holds its annual conferences in resort locations like Henderson, Nev.; Rancho Mirage, Calif.; and Scottsdale, Ariz. The council's president, Kathleen Smith, defends the events as focused on work. "I am confident in the respect and care that my members have for the students in their states," she said.
Guaranteed Return
Nonprofit lenders have also helped themselves, and their executives, through a federal law meant to help protect them at a time when the cost of making loans was high.
In the 1980s, when the economy was in the doldrums, Congress allowed nonprofit lenders — those that finance their loans with tax-exempt bonds — a guaranteed return of 9.5 percent. Congress eliminated the 9.5-percent guarantee in 1993 but grandfathered in loans already made. Several state-chartered nonprofit lenders, however, maintained that the government's regulations allowed them to keep receiving the 9.5-percent return by simply refinancing bonds issued before the cutoff date.
Some loan companies collected at least $6-billion in additional federal subsidies, according to a 2004 report by the Institute for College Access & Success. Pheaa ranked second only to the National Education Loan Network, a for-profit student-loan provider based in Nebraska that had bought some nonprofit agencies, in the volume of loans it submitted for the extended 9.5-percent reimbursement, the report said.
For several years, the subsidies from the 9.5-percent program provided Pheaa with a "rather large portion" of its profits, Pheaa's chief executive, Richard E. Willey, told state legislators at a hearing in February.
Over those same years, Pheaa executives embarked on a spending spree, incurring expenses such as $45,000 to charter a Lear jet, and more than $860,000 on trips that included spa treatments for spouses and staff members, limousine rides, and falconry lessons.
The spending was first reported by The Patriot-News of Harrisburg and other news organizations in Pennsylvania that spent 19 months fighting for public access to the records. Pheaa spent $410,000 opposing the disclosure.
Pennsylvania is now among a few states that are re-evaluating the benefit that such entities provide their students. Gov. Edward G. Rendell, a Democrat, and some members of the legislature have given encouragement to persistent suggestions by Sallie Mae that it purchase Pheaa assets.
State Rep. Craig A. Dally, a Republican, while expressing support for Pheaa's mission, told Mr. Willey at the February hearing, "You've certainly caused some of your own problems."
This year in Missouri, Gov. Matt Blunt, a Republican, signed into law a measure ordering the Missouri Higher Education Loan Authority to sell some of its student loans to help pay for $350-million in college construction projects. That was short of the outright sale of the agency that had been under debate.
'Extremely Lucrative'
Even critics of some of the behavior of nonprofit lenders agree that they might be a better alternative.
Nonprofit lenders and servicers "tend to be more responsive" to students, said Alan Collinge, founder of StudentLoanJustice.org, an advocacy group.
Yet, he said, "All lenders, whether nonprofit or for-profit, are operating in an extremely lucrative environment, and are protected by largely the same sets of laws that provide little protection for the borrowers, and allow huge fees, and draconian collection tools for delinquent debt."
The nonprofit agencies do give more money to students than for-profit lenders do; most pay their executives less; and none have been found engaging in such practices as making payments to college administrators or helping colleges shape their enrollments to steer needy students into larger loans, said Jon H. Oberg, a former U.S. Education Department researcher.
Pheaa's profits are used for purposes like forgiving the debt of active-duty soldiers and encouraging the training of more nurses in Pennsylvania. Brazos runs seminars to help high-school students understand their loan options. Edfund donates to groups like the Orphan Foundation of America.
"The not-for-profits are obviously not clean on a lot of things," Mr. Oberg says, "and that's why Congress really needs to reform them."
Yet the nonprofit lenders could also be seen by Congress as allies, especially as students increasingly face the need to finance their education through the growing private loan industry, he said.
"That," Mr. Oberg says, "is where their tax-exempt privileges and so on could do students and taxpayers of the country a real service."
Tuesday, August 7, 2007
Saturday, July 28, 2007
YOUR Oregon Rep!
I have volunteered and been accepted for the position of StudentLoanJustice.org's Oregon State representative.
The biggest thing about this is that now there IS someone to talk to, here in Oregon, about student loan issues. I know from personal experience that it can feel very lonely (loanly?) out there, feeling like you're the only one with a financial hardship due to high student loans.
You aren't alone, though. One of the biggest things that is happening is a slow awakening throughout the country. More and more of us who are in the same boat are reaching out to one another and forming bonds and strength. It is that strength that can slowly topple corporate mountains like Sallie Mae.
I need your help, though, to get the word out that we are here, that we need more support, and that we can work together to change things.
We need people who are willing to copy and pass out flyers, post information, get meeting places set up, and be willing to work with me on getting the word out about this organization. We are grass-roots, so there's no funds - it's just us... If you have the ability to get interviews with local campus papers, free local papers like Willamette Weekly or The Mercury, or even The Portland Tribune, please do so - and let me know as well.
This can be something really big, and you can be a part of it, from the ground up.
I will continue to post my own journey regarding Sallie Mae here, and I will also be posting what I'm doing locally within the Portland area.
~M
The biggest thing about this is that now there IS someone to talk to, here in Oregon, about student loan issues. I know from personal experience that it can feel very lonely (loanly?) out there, feeling like you're the only one with a financial hardship due to high student loans.
You aren't alone, though. One of the biggest things that is happening is a slow awakening throughout the country. More and more of us who are in the same boat are reaching out to one another and forming bonds and strength. It is that strength that can slowly topple corporate mountains like Sallie Mae.
I need your help, though, to get the word out that we are here, that we need more support, and that we can work together to change things.
We need people who are willing to copy and pass out flyers, post information, get meeting places set up, and be willing to work with me on getting the word out about this organization. We are grass-roots, so there's no funds - it's just us... If you have the ability to get interviews with local campus papers, free local papers like Willamette Weekly or The Mercury, or even The Portland Tribune, please do so - and let me know as well.
This can be something really big, and you can be a part of it, from the ground up.
I will continue to post my own journey regarding Sallie Mae here, and I will also be posting what I'm doing locally within the Portland area.
~M
Suggestions for those with issues...
I've been getting comments requesting options that they might have regarding the horrible collection practices that Sallie Mae has instituded against them. I know, they're awful, and SM doesn't honestly have a leg to stand on. Regardless of prior comments that I've read about "due diligence", I've also consulted with the William D Ford institution (the Federal Government's answer to Sallie Mae), and have been advised that "due diligence" is superceded by the FDCPA.
Those representatives you speak with are front-liners. They get paid bonuses for each buck they make us cough up, and are trained to ignore the more polite virtues of discussion (as, I'm certain, you've found). They don't want to work with you, because that would mean they'd have to acknowledge their own humanity while working for a company that has none.
The following email is for a woman in the PR department at Sallie Mae. She is a very *nice* woman... I've spoken with her on the phone several times, and we've exchanged emails. She is prompt, polite, and is willing to both listen and get the issues heard at the appropriate level. What I do ask is that you PLEASE give her a chance. The front-liners are one thing, the higher-ups and those outside of the collection loop are another. That's not to say they aren't all part of the same company, only that their tactics are better.
With that said, prior to contacting her, you should do the following:
1. Utilize your fax machine and fax a copy of a "cease and desist" letter over to both customer service and the legal department (at SM, they're the same fax #, just fax it twice with two separate cover letters on it). If you want, go ahead and use mine as an outline, re-writing it to fit your specific information and issues. Make sure you bold those items that were violated, to clearly indicate to them what they have done wrong. Also, make sure that you clearly state that a transmission indicating "OK" is the same as Sallie Mae agreeing to your cease and desist request.
2. Document each additional phone call after you fax that letter. Legally, after you receive that transmission report, they can no longer call you more than once every 24 hours. Period, end of story. That's from the Federal Government, folks, so if you still don't believe me, go ahead and call the William D Ford foundation. They'll be glad to clarify that with you, just like they did with me.
3. Email Mary Fetter. MARY.FETTER@slma.com Again, she's a really nice woman, so when you email her, start from the beginning, and tell your story about what's been going on, from beginning to now. Let her know that you need to have resolution to this issue, because you are attempting to pay your loan, but you cannot succeed in doing so based on the demands that are currently being given by Sallie Mae. Request that someone contact you regarding working with you and your current income situation, so that you can avoid defaulting or charging off, and can also continue to live / eat / pay other bills.
Keep in mind: Even the higher-ups are mostly interested in getting your money. However, they have the ability to set up your loan so that you can actually afford to pay it off, rather than having a default / charge-off, and having you live out of a cardboard box.
Currently, there is nothing "technically" illegal that Sallie Mae is doing, other than the FDCPA violations. They can, as a private company, charge as much interest as they see fit, and re-configure loans around based on their own profit rather than your personal interest. Unless they have multiple FDCPA violations, or violations after the cease and desist letters, there is nothing LEGALLY you can do against them. There *is* a class-action lawsuit brewing out of FL, which I'm a part of, through James, Hoyer (see my linky goodness section). If you want to be a part of it, call or email them very soon - they want all the documentation they can get, so be prepared to either make copies and mail them, or fax them over - letters, emails, all the loan paperwork, disclosure statements, everything.
As far as bankruptsy is concerned, well... It's a major gray area. In order to file for bankruptsy and include your private loan with Sallie Mae, you must do so under proof of hardship. No lawyer that I know of is currently willing to pick up the case, so you'd have to do all the legwork, paperwork, filing, and court stuff on your own, at your own expense... Here's the (darkly) amusing part: If you can actually AFFORD to do all of this, you're not in hardship, and therefore won't be able to qualify for a bankruptsy judgement on your loan.
The courts look on private (or signature) Sallie Mae loans as a "school" loan. Period, end of story. The Federal Government look on these same loans and says "same as credit cards, we won't touch 'em". So, those of us who ended up with a signature loan, and didn't get (or weren't) educated on what it was prior to signing the paperwork, are stuck. The only way to get rid of it is to attempt to consolidate it with a home or car loan via a bank, and make sure they over-compensate you for the amount owed to Sallie Mae - since it takes 30 days for the loan payment to post, and meanwhile your interest is still accruing (something they WON'T tell you, either).
So, that's the current scoop. I ask that you please use Mary Fetter's email address wisely. Do not spam or threaten, but utilize it with a business-like approach. It is tempting to go off the deep end, however don't sink to their level. Keep your dignity, and keep working on getting a fair shake at paying your loan off.
~M
Those representatives you speak with are front-liners. They get paid bonuses for each buck they make us cough up, and are trained to ignore the more polite virtues of discussion (as, I'm certain, you've found). They don't want to work with you, because that would mean they'd have to acknowledge their own humanity while working for a company that has none.
The following email is for a woman in the PR department at Sallie Mae. She is a very *nice* woman... I've spoken with her on the phone several times, and we've exchanged emails. She is prompt, polite, and is willing to both listen and get the issues heard at the appropriate level. What I do ask is that you PLEASE give her a chance. The front-liners are one thing, the higher-ups and those outside of the collection loop are another. That's not to say they aren't all part of the same company, only that their tactics are better.
With that said, prior to contacting her, you should do the following:
1. Utilize your fax machine and fax a copy of a "cease and desist" letter over to both customer service and the legal department (at SM, they're the same fax #, just fax it twice with two separate cover letters on it). If you want, go ahead and use mine as an outline, re-writing it to fit your specific information and issues. Make sure you bold those items that were violated, to clearly indicate to them what they have done wrong. Also, make sure that you clearly state that a transmission indicating "OK" is the same as Sallie Mae agreeing to your cease and desist request.
2. Document each additional phone call after you fax that letter. Legally, after you receive that transmission report, they can no longer call you more than once every 24 hours. Period, end of story. That's from the Federal Government, folks, so if you still don't believe me, go ahead and call the William D Ford foundation. They'll be glad to clarify that with you, just like they did with me.
3. Email Mary Fetter. MARY.FETTER@slma.com Again, she's a really nice woman, so when you email her, start from the beginning, and tell your story about what's been going on, from beginning to now. Let her know that you need to have resolution to this issue, because you are attempting to pay your loan, but you cannot succeed in doing so based on the demands that are currently being given by Sallie Mae. Request that someone contact you regarding working with you and your current income situation, so that you can avoid defaulting or charging off, and can also continue to live / eat / pay other bills.
Keep in mind: Even the higher-ups are mostly interested in getting your money. However, they have the ability to set up your loan so that you can actually afford to pay it off, rather than having a default / charge-off, and having you live out of a cardboard box.
Currently, there is nothing "technically" illegal that Sallie Mae is doing, other than the FDCPA violations. They can, as a private company, charge as much interest as they see fit, and re-configure loans around based on their own profit rather than your personal interest. Unless they have multiple FDCPA violations, or violations after the cease and desist letters, there is nothing LEGALLY you can do against them. There *is* a class-action lawsuit brewing out of FL, which I'm a part of, through James, Hoyer (see my linky goodness section). If you want to be a part of it, call or email them very soon - they want all the documentation they can get, so be prepared to either make copies and mail them, or fax them over - letters, emails, all the loan paperwork, disclosure statements, everything.
As far as bankruptsy is concerned, well... It's a major gray area. In order to file for bankruptsy and include your private loan with Sallie Mae, you must do so under proof of hardship. No lawyer that I know of is currently willing to pick up the case, so you'd have to do all the legwork, paperwork, filing, and court stuff on your own, at your own expense... Here's the (darkly) amusing part: If you can actually AFFORD to do all of this, you're not in hardship, and therefore won't be able to qualify for a bankruptsy judgement on your loan.
The courts look on private (or signature) Sallie Mae loans as a "school" loan. Period, end of story. The Federal Government look on these same loans and says "same as credit cards, we won't touch 'em". So, those of us who ended up with a signature loan, and didn't get (or weren't) educated on what it was prior to signing the paperwork, are stuck. The only way to get rid of it is to attempt to consolidate it with a home or car loan via a bank, and make sure they over-compensate you for the amount owed to Sallie Mae - since it takes 30 days for the loan payment to post, and meanwhile your interest is still accruing (something they WON'T tell you, either).
So, that's the current scoop. I ask that you please use Mary Fetter's email address wisely. Do not spam or threaten, but utilize it with a business-like approach. It is tempting to go off the deep end, however don't sink to their level. Keep your dignity, and keep working on getting a fair shake at paying your loan off.
~M
Monday, July 2, 2007
That's it, eh? We'll see...
Got a call from the person who was processing my refinancing. They said they had "great news", and that it was refinanced at the lower rate, to make my payments $311/month. I seem to remember something about $250/month, so this is still high for me... I'm going to be calling Mr. Firestein and finding out what's going on. That and I still can't get an answer regarding the two final loan disbursement payments that were done 6 months AFTER I graduated and left school - one for almost $9,000, and the other for almost $4,000. No one at Sallie Mae seems to know what they are, only that it's "obviously" something that was owed and now must be paid for... Sorry folks, if you can't explain what it was to the person you supposedly loaned it to, then I can't be responsible for it.
Bleh.
~M
Bleh.
~M
Tuesday, June 5, 2007
Interesting...
So, talked with good ol' Barry yesterday, the Veep from Sallie Mae. He is willing to look at consolidating the loan, lowering my interest rate substantially (his words), and extending the loan out as far as possible to get the payments down to a reasonable level.
I'm to hear from a financial person today about what the terms would be. I'm going to ask for them in writing before I agree with them, and if they aren't reasonable, then I will tell them so.
I brought up the last 2 loans that were taken out, 6 months AFTER I was finished with school - he didn't know what they were, and said he would look into them. Since they were each over two grand, I feel they're significant enough, and I at least deserve an explaination of what the @#$%#$ it is - and if they can't give me one, then they need to remove them. Period. End of story.
Upshot of the discussion is that if I continue to have issues with the loan, I can call him directly.
~M
I'm to hear from a financial person today about what the terms would be. I'm going to ask for them in writing before I agree with them, and if they aren't reasonable, then I will tell them so.
I brought up the last 2 loans that were taken out, 6 months AFTER I was finished with school - he didn't know what they were, and said he would look into them. Since they were each over two grand, I feel they're significant enough, and I at least deserve an explaination of what the @#$%#$ it is - and if they can't give me one, then they need to remove them. Period. End of story.
Upshot of the discussion is that if I continue to have issues with the loan, I can call him directly.
~M
Friday, June 1, 2007
Awaiting yet another call...
I have been going back and forth for a week or more now with the PR people at Sallie Mae. Seems that the interview I did with Business Week has perked some interest there. I got this email from Mary Fetter, the person I'd been speaking with, regarding contact with Barry Feierstein (the SM rep that Ben Elgin interviewed in the same interview):
I wanted to let you know that Barry Feierstein will be calling you this Monday, June 4. Barry is a senior executive at Sallie Mae and looks forward to talking to you in more detail about your student loan situation. He will call you on the cell
number you provided. Enjoy your weekend.
Sincerely,
Mary
I also got a voicemail from Mr Feierstein, letting me know he was looking over my information, and looked forward to working with me to "come to better terms" with the loan...
Meanwhile, I've sent out all of my paperwork that I've ever gotten from Sallie Mae over to James, Hoyer PA, the law firm in FL doing a fairly high profile fraud class action lawsuit against Sallie Mae. They were apparently intrigued by my story, and wanted to see the paperwork I had. I'm supposed to hear back from them sometime soon as well.
We shall see what happens on both fronts.
~M
I wanted to let you know that Barry Feierstein will be calling you this Monday, June 4. Barry is a senior executive at Sallie Mae and looks forward to talking to you in more detail about your student loan situation. He will call you on the cell
number you provided. Enjoy your weekend.
Sincerely,
Mary
I also got a voicemail from Mr Feierstein, letting me know he was looking over my information, and looked forward to working with me to "come to better terms" with the loan...
Meanwhile, I've sent out all of my paperwork that I've ever gotten from Sallie Mae over to James, Hoyer PA, the law firm in FL doing a fairly high profile fraud class action lawsuit against Sallie Mae. They were apparently intrigued by my story, and wanted to see the paperwork I had. I'm supposed to hear back from them sometime soon as well.
We shall see what happens on both fronts.
~M
Saturday, May 19, 2007
Letter to a PR person at SM...
So, the gal who contacted me from Sallie Mae FINALLY called me back (late) on Friday. The message was that she was still working on getting someone in a "supervisory" position to get back to me regarding my situation to help me "lower" my monthly payments... She invited me to write to her via email, so I did...
Dear [PR Person],
I got your voicemail on Friday. Honestly, to say that I'm disappointed with Sallie Mae so far is an understatement.
You have to understand that from the beginning, I have felt that Sallie Mae and its representatives have been less than up-front with me.
The private loan was approved by Sallie Mae via WCI, *knowing* that I had a less-than-$600 per month income.
The loan was then "sold" from Stillwater National Bank, a subsidiary of Sallie Mae, TO Sallie Mae...
The interest rate of anywhere from 13% - 18% was applied to my private loan throughout my time at school.
At my exit interview, I was told by the loan representative that the payments would be $450 per month...
Less than 4 months later, I was informed by Sallie Mae that indeed, it was not - it would be $554 per month.
I attempted at that point to consolidate my loans, but even though both my private loan and my FFELPS loan were under the same account number, only my FFELPS was consolidated. When I asked why only that one was consolidated, I was told the private loan COULDN'T be consolidated.
I attempted no less than 6 times to speak with Sallie Mae representatives to try and work with them regarding my income, and ALL SIX TIMES I was called names, told I had no rights, and told that Sallie Mae was not willing to take ANYTHING less than the full $554 monthly payments.
I attempted again to consolidate the private loan, both via CitiBank and via Sallie Mae. Both times, my request was denied... why? Because Sallie Mae had been dinging me with credit reports, AND I didn't make enough money to pay back the loan... The loan which Sallie Mae had, in my opinion, irresponsibly agreed upon in the first place.
I now make double what I did at the time my loan was agreed upon, but I still don't make enough money to consolidate my loan, move my loan to another bank, or pay the amount that Sallie Mae is requesting...
To me, this is the BIGGEST bunch of irresponsibility I have ever seen in a financial institution, unless you count the World Bank debacle.
I feel that, in light of everything that has happened, Sallie Mae should do the right thing and disburse the loan completely. If they had denied me from the beginning, KNOWING what my income was at the time, and KNOWING that I would most likely be unable to pay back the loan at all, I would not be in this mess. The choices made by Sallie Mae were irresponsible at best, and inexcuseable at worst.
I am available Mondays and Tuesdays all day, and Fridays until 1pm PST.
Thank you
We'll see what she has to say to that...
~M
Dear [PR Person],
I got your voicemail on Friday. Honestly, to say that I'm disappointed with Sallie Mae so far is an understatement.
You have to understand that from the beginning, I have felt that Sallie Mae and its representatives have been less than up-front with me.
The private loan was approved by Sallie Mae via WCI, *knowing* that I had a less-than-$600 per month income.
The loan was then "sold" from Stillwater National Bank, a subsidiary of Sallie Mae, TO Sallie Mae...
The interest rate of anywhere from 13% - 18% was applied to my private loan throughout my time at school.
At my exit interview, I was told by the loan representative that the payments would be $450 per month...
Less than 4 months later, I was informed by Sallie Mae that indeed, it was not - it would be $554 per month.
I attempted at that point to consolidate my loans, but even though both my private loan and my FFELPS loan were under the same account number, only my FFELPS was consolidated. When I asked why only that one was consolidated, I was told the private loan COULDN'T be consolidated.
I attempted no less than 6 times to speak with Sallie Mae representatives to try and work with them regarding my income, and ALL SIX TIMES I was called names, told I had no rights, and told that Sallie Mae was not willing to take ANYTHING less than the full $554 monthly payments.
I attempted again to consolidate the private loan, both via CitiBank and via Sallie Mae. Both times, my request was denied... why? Because Sallie Mae had been dinging me with credit reports, AND I didn't make enough money to pay back the loan... The loan which Sallie Mae had, in my opinion, irresponsibly agreed upon in the first place.
I now make double what I did at the time my loan was agreed upon, but I still don't make enough money to consolidate my loan, move my loan to another bank, or pay the amount that Sallie Mae is requesting...
To me, this is the BIGGEST bunch of irresponsibility I have ever seen in a financial institution, unless you count the World Bank debacle.
I feel that, in light of everything that has happened, Sallie Mae should do the right thing and disburse the loan completely. If they had denied me from the beginning, KNOWING what my income was at the time, and KNOWING that I would most likely be unable to pay back the loan at all, I would not be in this mess. The choices made by Sallie Mae were irresponsible at best, and inexcuseable at worst.
I am available Mondays and Tuesdays all day, and Fridays until 1pm PST.
Thank you
We'll see what she has to say to that...
~M
Friday, May 11, 2007
BusinessWeek's take on the issue...
by Ben Elgin
John Liles of Cleveland, Ga., dreamed of becoming a sports coach. He had lost his $9-an-hour job as a machine operator in 2005 as a result of a lengthy bout with diabetes. His illness hadn't stopped him from coaching his children's sports teams, however, and he hoped to turn the hobby into a career. He needed an associate's degree, so he signed up to study online with American InterContinental University (AIU).
To obtain loans, the school guided him to SLM Corp., better known as Sallie Mae. Liles, now 47, says he explained to AIU that he couldn't afford interest of more than 9%, and the school encouraged him to move ahead with the loan application. Several months into his courses, he says he was shocked to discover in a form Sallie Mae sent him that one of his loans, for $6,000, was growing at 18.1%. It would require monthly payments of $110 for the next 15 years, totaling $19,924. "I can't afford it," he says.
Cases like Liles' are proliferating as the cost of education has far outpaced the availability of low-interest loans whose repayment the federal government guarantees. With enrollment rising in trade schools, more lower-income students are relying on high-interest private loans, such as the one Liles received. "For hundreds of thousands of citizens, the worst mistake they ever made was to go back to school," says Alan Collinge, founder of advocacy group Student Loan Justice.
Many borrowers describe the loan process as opaque, saying schools and lenders don't explain interest rates or postgraduation payments. Some borrowers say they were unaware that private loans are different from less expensive federally guaranteed loans. "When you hear Sallie Mae,' you think of somebody's favorite aunt baking them a pie," says borrower Molly Cosgrove of Portland, Ore. "You don't think of high-interest loans." Once a federally sponsored organization, Sallie Mae became a fully independent corporation in 2004. It offers both private and federally backed loans.
After losing her $20,000-a-year job at a call center, Cosgrove enrolled in Western Culinary Institute in Portland in 2004, planning to become a chef. She says the school lined up student loans for her with assurances that the terms would be reasonable and her diploma would attract appealing job offers. She asked few questions. Today, Cosgrove, 33, has her degree—and $43,000 in debt, most of it accruing interest at 18.5%. Unable to get a job as a chef for more than $8.50 an hour, she went back to answering phones for $13 an hour. She owes Sallie Mae $553 a month but doesn't have anything close to that to spare. "I can't see a way out of the mess I inadvertently created," she says.
Career Education Corp. (CECO ), which owns both AIU and Western Culinary Institute, says it is not responsible for, and often not aware of, loan terms, which are agreed to by the student and lender. It adds that its schools inform students that private loans carry higher interest rates.
Sallie Mae says the terms of its private student loans are made clear in writing to would-be borrowers before any money is disbursed. "These are college students. At some point you have to read what you're signing," says Barry Feierstein, Sallie Mae's senior vice-president for private credit loans.
The lender says it recently capped rates on new private loans and is exploring ways to relieve the high rates facing some recent graduates. "We want people to have a fighting chance," says Feierstein.
John Liles of Cleveland, Ga., dreamed of becoming a sports coach. He had lost his $9-an-hour job as a machine operator in 2005 as a result of a lengthy bout with diabetes. His illness hadn't stopped him from coaching his children's sports teams, however, and he hoped to turn the hobby into a career. He needed an associate's degree, so he signed up to study online with American InterContinental University (AIU).
To obtain loans, the school guided him to SLM Corp., better known as Sallie Mae. Liles, now 47, says he explained to AIU that he couldn't afford interest of more than 9%, and the school encouraged him to move ahead with the loan application. Several months into his courses, he says he was shocked to discover in a form Sallie Mae sent him that one of his loans, for $6,000, was growing at 18.1%. It would require monthly payments of $110 for the next 15 years, totaling $19,924. "I can't afford it," he says.
Cases like Liles' are proliferating as the cost of education has far outpaced the availability of low-interest loans whose repayment the federal government guarantees. With enrollment rising in trade schools, more lower-income students are relying on high-interest private loans, such as the one Liles received. "For hundreds of thousands of citizens, the worst mistake they ever made was to go back to school," says Alan Collinge, founder of advocacy group Student Loan Justice.
Many borrowers describe the loan process as opaque, saying schools and lenders don't explain interest rates or postgraduation payments. Some borrowers say they were unaware that private loans are different from less expensive federally guaranteed loans. "When you hear Sallie Mae,' you think of somebody's favorite aunt baking them a pie," says borrower Molly Cosgrove of Portland, Ore. "You don't think of high-interest loans." Once a federally sponsored organization, Sallie Mae became a fully independent corporation in 2004. It offers both private and federally backed loans.
After losing her $20,000-a-year job at a call center, Cosgrove enrolled in Western Culinary Institute in Portland in 2004, planning to become a chef. She says the school lined up student loans for her with assurances that the terms would be reasonable and her diploma would attract appealing job offers. She asked few questions. Today, Cosgrove, 33, has her degree—and $43,000 in debt, most of it accruing interest at 18.5%. Unable to get a job as a chef for more than $8.50 an hour, she went back to answering phones for $13 an hour. She owes Sallie Mae $553 a month but doesn't have anything close to that to spare. "I can't see a way out of the mess I inadvertently created," she says.
Career Education Corp. (CECO ), which owns both AIU and Western Culinary Institute, says it is not responsible for, and often not aware of, loan terms, which are agreed to by the student and lender. It adds that its schools inform students that private loans carry higher interest rates.
Sallie Mae says the terms of its private student loans are made clear in writing to would-be borrowers before any money is disbursed. "These are college students. At some point you have to read what you're signing," says Barry Feierstein, Sallie Mae's senior vice-president for private credit loans.
The lender says it recently capped rates on new private loans and is exploring ways to relieve the high rates facing some recent graduates. "We want people to have a fighting chance," says Feierstein.
Back-peddle much?
So, there I was yesterday, working on my wedding dress at home on one of my days off. My cell rings, and when I look at the caller ID, it's a 703 number.
Hmmm, I wonder... Who would be calling me from out of state?
I answer, and lo and behold, it's Sallie Mae.
Now, while I'm getting mildly worked up about the fact that they've contacted me after I expressly told them NOT to, the person on the other line is reassuring me that this is not a collections call. In fact, her name is Mary Fedder, and she works with Sallie Mae's "communications department" (i.e. the PR people).
Apparently, due to the fact that I've been speaking with Businessweek, and the fact that they look particularly cruddy - and in light of the recent investigations that the government has begun due to their questionable practices, she was calling to find out if there's anything Sallie Mae can do to help me... Why? Because "Sallie Mae is dedicated to assisting all their customers, especially those faced with financial difficulties.".
Trust me, it was all I could do to NOT laugh in her face. I succeeded, barely, to contain myself as she proceeded to explain that, while she didn't have authority to access my account, and while she couldn't promise anything because she didn't have that power, she'd like to talk with some people to find out what options would be available to help me.
She suggested a co-signer, which I blew out of the water. I refuse to put any of my friends or family through what they've put me through - and further more, they can't afford the crappy terms anymore than I can. She also asked what I'd done to try and alleviate the situation - so, I mentioned the fact that I'd attempted to consolidate the loan to lower the interest rate and payments - and was refused... Because I didn't make enough money.
She says she's going to be getting back to me by next Friday. We'll see what she has to offer, if anything.
~M
Hmmm, I wonder... Who would be calling me from out of state?
I answer, and lo and behold, it's Sallie Mae.
Now, while I'm getting mildly worked up about the fact that they've contacted me after I expressly told them NOT to, the person on the other line is reassuring me that this is not a collections call. In fact, her name is Mary Fedder, and she works with Sallie Mae's "communications department" (i.e. the PR people).
Apparently, due to the fact that I've been speaking with Businessweek, and the fact that they look particularly cruddy - and in light of the recent investigations that the government has begun due to their questionable practices, she was calling to find out if there's anything Sallie Mae can do to help me... Why? Because "Sallie Mae is dedicated to assisting all their customers, especially those faced with financial difficulties.".
Trust me, it was all I could do to NOT laugh in her face. I succeeded, barely, to contain myself as she proceeded to explain that, while she didn't have authority to access my account, and while she couldn't promise anything because she didn't have that power, she'd like to talk with some people to find out what options would be available to help me.
She suggested a co-signer, which I blew out of the water. I refuse to put any of my friends or family through what they've put me through - and further more, they can't afford the crappy terms anymore than I can. She also asked what I'd done to try and alleviate the situation - so, I mentioned the fact that I'd attempted to consolidate the loan to lower the interest rate and payments - and was refused... Because I didn't make enough money.
She says she's going to be getting back to me by next Friday. We'll see what she has to offer, if anything.
~M
Tuesday, May 8, 2007
New linky goodness...
Thank you to the person who posted the information here. James, Hoyer, Newcomer & Smiljanich, a law firm in Tampa FL, is looking into further fraud issues with Sallie Mae. Please go HERE or visit the link list on this page. It's a simple process of filling out your information, telling your story, and hitting "send". Can't get much more simple than that.
From the information I've read on their website, they specialize in class action lawsuits and work on advocate cases similar to us Sallie Mae victims. It's time to put some more metal to the grindstone, and push a bit more.
~M
From the information I've read on their website, they specialize in class action lawsuits and work on advocate cases similar to us Sallie Mae victims. It's time to put some more metal to the grindstone, and push a bit more.
~M
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