Federal Student Loan-Change in Repayment Terms

[sskem96]

DH and I consolidated all of our student loans in 1999 and we were supposed to have a 15 year term with a graduated payment. Our original loan amount was $18,538 with a payment of $127.45 for 24 months, then $214.33 for the remaining 13 years with an interest rate of 8.25%. We did get an approved forbearance (I believe that's what it was called) when each of our 2 children were born, but that was pre-arranged and approved. We have always made all of our monthly payments otherwise.

We received notice last month that our loan was transferred from Nelnet to EdFinancial. I made my first payment with them last week. It was billed for the same amount as always, $214.33, and I sent $225.

I received a letter from EdFinancial today stating that the terms of our loan had changed to "ensure that the loans are repaid in full accordance with the program guidelines." My current principal amount is $11,518.67. They want me to pay $725.53/mo for the next 16 months, and a final payment of $725.41 on 8/27/11. I know my loan shouldn't be due to be paid off until 3/27/2014. There's no way we can possibly afford this increase in payment. Can they really change the repayment terms from what they were on my original promissary note?

Of course it's the weekend and I can't call anyone to find out what the story is. I've tried searching for information on-line, but I can't find the answers I'm looking for, so I thought maybe some of my financial savvy dis friends could help me out! I'm afraid we're going to have to go get a home equity loan to pay off the student loans!

Any information would be greatly appreciated!

 

[VanessainWonderland]

Oh my GOODNESS You are scaring me!!!!

I also have a loan through NELNET, but have not received any letters from them. Please post any updates you may find!

 

[dmslush]

You probably just need to renegotiate a new repayment plan, it looks like they have the same ones as nelnet:

http://www.edfinancial.com/Tools/Articles/RepaymentOptions

 

[sskem96]

You probably just need to renegotiate a new repayment plan, it looks like they have the same ones as nelnet:

http://www.edfinancial.com/Tools/Articles/RepaymentOptions

I'll certainly be calling them on Monday to try, but I don't think I'll be eligible to do that. It seems to me that those terms start when the loan originates. It won't start over just because the loan was transferred to a new holder. Of course I don't think it should have changed at all after being transferred and I'm hoping it's just a terrible mistake that they'll be able to figure out! So glad I still have the original paperwork!

 

[SOnotLayuh]

I'm terrified that this sort of thing will happen to me - I'm working on my MA!

Good luck

 

[tiredsigh]

Yikes! I only took out direct loans from the government so I don't have that issue to worry about. I hope you can get it worked out.

 

[disneymarie]

I redid my loan with Direct Loans.com, this reduced my payment from $400 a month to a95, when I lost my job, it is now down to $0 until I find a job. Just started working, so I expect it will go up again,
But ther is no stress, no phone calls, they change as my income does. I hated AES and they would not negotiate a lesser amount.
THis is a gov't program and they would rather have some payment then none.
There web site that explains it.

 

[mkaccountant]

I will second AES is horrible. I took out my undergrad loan through SunTrust (who uses AES) and when completed was to receive a $300 "rebate" on it. I had to call them, fax a copy of my diploma, and call two more times to get it applied. They told me on my last call that even though I faxed a copy of my diploma they still had to receive notification from the university saying I completed my degree. Finished my MBA in December and waited a couple months to get my "rebate" applied. Nothing. So I sent an email. The response a week later said I had to mail or fax a request to them with my signature and proof of degree completion within 90 days of "late" day of attendance. What? So the last day you take a final, graduation, what exactly? Needless to say I am sure I will have to make some phone calls.

OP ~ I wish you lots of luck. I am very empathetic to what you are going to have to go through to get your situation resolved.

 

[seashoreCM]

No they cannot change the terms of the original loan note.

They are trying to scare you into paying more than you need to.

You don't have to call and use up precious anytime minutes or run up long distance charges. It's not that urgent.

Just send your regular payment for now and if they send another letter, write them using snail mail asking for an explanation, you do not have to add details beyond asking for "an explanation".

At your leisure you can shop around to see if you can find a fixed rate home equity loan with a lower interest rate in which case it might be worth your while to pay off the loan note you currently have.

Disney hints: http://www.cockam.com/disney.htm

 

[sskem96]

Yikes! I only took out direct loans from the government so I don't have that issue to worry about. I hope you can get it worked out.

We only had direct loans from the government too! They were all Stafford Subsidized loans, and we just combined them into one payment through IDAPP when we graduated. They just keep being transferred from one holder to another, and we don't have any control over that.

I redid my loan with Direct Loans.com, this reduced my payment from $400 a month to a95, when I lost my job, it is now down to $0 until I find a job. Just started working, so I expect it will go up again,
But ther is no stress, no phone calls, they change as my income does. I hated AES and they would not negotiate a lesser amount.
THis is a gov't program and they would rather have some payment then none.
There web site that explains it.

Thanks, I'll look into that and see if it's a possiblility. We tried a few years ago to renegotiate for a lower interest rate when lots of lenders were advertising for that, but they wouldn't let us since we just have the 1 loan now so there's nothing left to consolidate.

No they cannot change the terms of the original loan note.

They are trying to scare you into paying more than you need to.

You don't have to call and use up precious anytime minutes or run up long distance charges. It's not that urgent.

Just send your regular payment for now and if they send another letter, write them using snail mail asking for an explanation, you do not have to add details beyond asking for "an explanation".

At your leisure you can shop around to see if you can find a fixed rate home equity loan with a lower interest rate in which case it might be worth your while to pay off the loan note you currently have.

Disney hints: http://www.cockam.com/disney.htm

If I can't get anywhere with the current loan holder, I probably will look in to a home equity loan. I got something in the mail last week from State Farm about their home equity loans, so I might go see my agent this week and see what they can do for me. We thought about doing that in the past just to lower the interest rate, but thought it would be better to keep the student loans where they were for the options of deferrment or forbearance. I'd rather just pay them off with a home equity loan rather than take the chance of negatives on my credit report from EdFinancial if I'm not paying the amount they think I should be. Even if they don't have the right to raise my payment, if I don't pay the amount they ask and they report it as late payments or claim I'm in default, it could do a lot of damage to my credit. Even though I can prove otherwise, it's extremely difficult to get something like that off your credit report.

 

[dis-happy]

Be careful with the Home Equity Loan. A default on that (job loss, etc) means the bank can take your house. Not saying it's always a bad idea, but you need to go in fully informed of all the risks.

In your shoes, I'd probably make them stick to the original terms (as they are required to do) and pay off with extra principal when you can.

 

[DVCBELLE]

My DH works for a student loan company and has a couple of questions.

He said it sounds like they didn't adopt the graduated payment plan when they got the loan. A phone call to them might clear up the issue but if not you can pm me and I will have him help you figure out what questions you need to be asking.

Also, are you certain that it was a federal loan and not a private loan (i.e. not made as part of the federal student loan program)? And, was the loan sold by Nelnet to EdFinancial or did just the servicing change?

 

[sskem96]

I'm not sure if the loan was sold or just transferred or what exactly. This was the first month I had to send the payment to EdFinancial instead of Nelnet. The letter I got does say the owner of the loan is IDAPP, so I'm guessing the servicing just changed. The original paperwork I have from 1999 is on letterhead from the Illinois Student Assistance Commission and it says it's a Federal Consolidation Loan.

 

[seashoreCM]

When you continue paying on the old schedule and the old terms, you are not asking for forbearance.

They are asking to accelerate. You are not obliged to comply.

They may not add late fees as long as you are paying according to the original terms and conditions.

Damaging your credit is blackmail and they can be sued for slander of credit.

Idf you were thinkg of paying down principal, procrastinate on that, paying just the regular payment, until this argument about wanting bigger payments is finished.

 

[sskem96]

Be careful with the Home Equity Loan. A default on that (job loss, etc) means the bank can take your house. Not saying it's always a bad idea, but you need to go in fully informed of all the risks.

In your shoes, I'd probably make them stick to the original terms (as they are required to do) and pay off with extra principal when you can.

That's another reason we decided not to go that route in the past. Our mortgage payment is small and we like it that way because we know if one of was unemployed or unable to work we wouldn't have to worry so much about the house payment.

 

[mrsklamc]

How does one sue for slander of credit? DH's report has a credit card that says it had late payments last year and he hasn't had it for about 7 years. We can't seem to get it to disappear.

 

[tiggspring]

We moved all are loans to Direct loans which you can reach through the department of education website. Since we transfered to the government we have had no trouble and they wont be sold to another lender which is what happened to you. We have had several medical emergencies and educational forbearances with NO TROUBLE. They just ask for info and approved them. We do have to pay back more but when your in an emergency that really doesn't seem so bad not like putting a lien on your home or constantly calling like the banks do. They have a plan based on your income and as long as you make the payments for 20 years your loan is forgiven which doesn't apply to you since your are so close to paying it off but thought others might want to know. Good Luck!

 

[seashoreCM]

How does one sue for slander of credit? DH's report has a credit card that says it had late payments last year and he hasn't had it for about 7 years. .

Start by disputing the untrue "facts" in a snail mail letter.

Back to the OP who so far has only received a letter describing higher payments.

Start by sending in the next regular payment at the "old" amount on time. Sit back and wait.

Actually I would send in yet one more regular payment (this would be something like 1-1/2 months ffrom now) before making a response.

The response (we're something like 2-1/2 monhts from today) would be in the form of asking for their copy of the loan note. Dont't send in your own copy to them yet.

Should you receive a past due notice that suggests they got no payment of any kind, you will need to send them another payment (old amount) immediately using certified mail. For now you do not have to accept their excuse that one late payment lets them change the terms of the whole loan.

 

[Juliet25]

OP, I too would recommend transfering your loans to direct loans. My student loan was constantly being transferred among lenders. Finally I consolidated them with direct loans and haven't had a problem. I also consolidated my husband's loans with them. In the seven years we've been with them we've never had a problem. You can even change your payment options on the website.

Good luck. It doesn't sound like you're going to have to come up with a big lump sum; just let them know you want to pay under the same terms as before.

 

[Free4Life11]

OP sorry for your troubles. I work for a student loan company and the payment plans can get screwy. Just call Ed Financial and ask them what's up. If they are unable to assist you, go ahead and re-consolidate the loans with Direct Loans (aka the government).