Anyone have their federal student loans randomly taken over by a new BAD servicer?

[gml120]

I was with ACS, who I chose to service my federal student loans about 10 years ago. Last month, a new company called SAF (Student Assistance Foundation) became the new servicer of my loans. How can this happen without me at least giving my consent and signing a new contract with this new company? All I got was a letter in the mail saying that these new people now service the loan and everything was transferred over and everything is ok. A week later I get a bill for the non-IBR rate I had set up with ACS. I call them about it and was reassured that all the paperwork was being transferred and that by the end of the week I'd get a new bill with the previous rate. Nothing. I call a week later and they tell me they had no paperwork about an IBR and I have to pay the huge bill and resubmit all the paperwork. I do that and now 2 weeks later I get another bill with 3 months of payments PAST DUE with late fees tacked on also citing threats of collection. So I call them and now they're telling me I need to make the old IBR payment amount, I didn't have to resubmit all that I did, and all these things will be worked out by the end of the month - basically ignore the bills and collection threats.
My question is: Can I yank my loans far far away from SAF? I mean honestly for the brief period that Sallie Mae serviced my loan it was better than this. Even if I do, can they be randomly shuffled back in the hands of SAF without my consent? It's hard enough to pay on this thing financially for the next 17 years, but now it's a nightmare to even extract the real story.

[KeithDoxen]

This stuff happens all the time. My federal student loans were transferred from one servicer to another a couple of months back. They first sent me a bill for the ten-year repayment amount each month, which was not the payment plan that I had been on with the previous servicer. I called them and they told me the same thing --- just wait for the paperwork to be processed and everything would be fine. Now I'm back on my IBR payment schedule, but it's still a different monthly payment than I had with the last lender. In my case my payment is now lower so I'm not complaining. But yes, these student loan servicers are extremely incompetent. My guess is that you won't have any problems anymore now that they've got all your paperwork correct. You might want to see if you can consolidate all your loans with Direct though. That would mean you'd be working directly with the federal government. They might be less likely to screw things up than some of these low rent private servicers.

[gml120]

Thanks for the advice Keith Unfortunately I am ineligible to consolidate with Direct because "you have already consolidated with a private company in the past". I was reading on the studentloans.gov site about the loan forgiveness offered after 120 consecutive payments. I was wondering if you know if that applies through past servicers or restarts once a new one takes over? My previous service won't answer any questions from me anymore and the new one, SAF just seems bewildered that such thing exists. The people at Direct said they would find out and call me back (not holding breath).

[GoingDown]

You might want to see if you can consolidate all your loans with Direct though. That would mean you'd be working directly with the federal government. They might be less likely to screw things up than some of these low rent private servicers.

Unfortunately, not true.

All of my student loans were consolidated with a direct consolidation loan, and then suddenly years later they dumped me off on some private servicer I had never even heard of before. Fortunately, the income contingent repayment plan I was on with the Direct Loan Servicing Center is still in effect, and my monthly payment is still zero dollars per month, so no biggie.

But yeah, for some reason, they are dumping all the loans onto new private servicers, which is strange because I thought they wanted to go away from private servicers and just let the government handle all the loans.

[GoingDown]

I CALL them about it and was reassured that all the paperwork was being transferred and that by the end of the week I'd get a new bill with the previous rate. Nothing. I CALL a week later and they tell me they had no paperwork about an IBR and I have to pay the huge bill and resubmit all the paperwork. I do that and now 2 weeks later I get another bill with 3 months of payments PAST DUE with late fees tacked on also citing threats of collection. So I CALL them and now they're telling me I need to make the old IBR payment amount, I didn't have to resubmit all that I did, and all these things will be worked out by the end of the month - basically ignore the bills and collection threats.
My question is: Can I yank my loans far far away from SAF? I mean honestly for the brief period that Sallie Mae serviced my loan it was better than this. Even if I do, can they be randomly shuffled back in the hands of SAF without my consent? It's hard enough to pay on this thing financially for the next 17 years, but now it's a nightmare to even extract the real story.

Stop calling them. Always put this stuff in writing and send it to them by certified mail. You are talking to the lowest person on the totem pole when you call them. When you write to them, they must respond to it because you now have a paper trail.

[HHM]

There is a special consolidation program that expires June 30, 2012. You may want to see if you qualify. Just google June 30 student loan consolidation, and that should get you the Dept of Ed. page about it.

Shot in the dark.

[KeithDoxen]

Thanks for the advice Keith Unfortunately I am ineligible to consolidate with Direct because "you have already consolidated with a private company in the past". I was reading on the studentloans.gov site about the loan forgiveness offered after 120 consecutive payments. I was wondering if you know if that applies through past servicers or restarts once a new one takes over? My previous service won't answer any questions from me anymore and the new one, SAF just seems bewildered that such thing exists. The people at Direct said they would find out and call me back (not holding breath).

A new servicer will not restart the clock on any of this but forgiveness after 120 payments only occurs if you are a public service employee. That is a special program for those employed in public service, which you may or may not qualify for depending on your line of work. If you are not in public service but on IBR, forgiveness won't occur until 25 years of payments are made.

[gml120]

Update: 4 months after the fiasco, SAF finally successfully applied my IBR to my govt loan and started billing with correct numbers. I was still getting collections calls every day or every other day which was really annoying this whole time and my online account still read as if I was 30,60,90,120 days past due but they cleaned that up with a new procedure to me called an "administrative forbearance" which brought the loan current. I must have really topped their charts for call volume in those 4 months because they added on a bonus 45 days of interest free forbearance citing "we thank you for your patience in this matter". Just a short 17 years of payments to go!

[gml120]

Update: The loan reads current but they totally lied to me (shocker I know!) Now that I can actually look at my payment history I found that the good faith IBR payments I made over 4 months were just applied to interest, nothing to principal. They also took the liberty of charging me $50 per month in "late fees" for a total of $200 added to the principal balance. Upon calling them and asking about this interest only payments debacle, here is what they actually told me about what happened.
1. You must have been behind in payments from your previous servicer - so you are now catching up on the accrued interest.
I made her look up the payment history (~15 min hold) for her to tell me all about how I was not behind and hmmm, that can't be the issue.. of which I already knew and told her.

2. "Oh, I see you took out a forbearance in 2007, so this must be the interest that accrued during that time and now you have to pay it off."
Really? See, that makes no sense because I actually paid for that when the loan came out of forbearance years ago, try again.
"Hmmm, I'll have to talk to my supervisor.... (another ~20 min hold)

3. "It seems that due to all the confusion of transferring your loan that when we put it in the administrative forbearance it instantaneously added 45 days worth of interest to your loan of which all your payments were being applied to during that time."
Since this sounded to me to be the most probable of all things that could have happened I proceeded to request a reversal of this problem since there is no way I will consent to add money to my principal because they chose to buy my loan and screw it up in the first place.

This is where it's at now. I made the request verbally and also in writing (certified mail) also including the request to have the late fees removed. Every time I talk to these people it's almost becoming a game to see what happens next because it's so absurd I almost can't believe what I'm hearing. I'll update when I get the next round of screwups

[SweetGeorgia]

Yes, me too! I got some random servicer in TN; I just thank my stars I didn't get tossed to Sallie Mae.

I spoke to a friend who works in college financial aid and apparently ALL loans serviced by the Dept of Education have been farmed out to several private servicers. Just sprinkled around randomly like corn for the chickens.

I went through quite a bit of trouble in the late 90s to get my loans consolidated so that I could be with DoE because they are SO MUCH BETTER than evil Sallie Mae. I'm a little pissed about this, but apparently there's nothing I can do.

I also checked my credit through CreditKarma, and I lost 20 points because all those old accounts are now "closed at consumer's request."

[patrickmead]

In Chapter 13's, you don't pay your student loans for 3-5 years. (DEFERRED)

[patrickmead]

I am a bankruptcy attorney in Massachusetts. Student loans are considered unsecured, non-dischargeable.