Every day, the SALT Blog throws a lot of fun, money-related links your way in Daily Interest. However, “a lot of links” means a lot of clicks. To simplify things, we step back every Monday and highlight a single story that we think you should check out. We call this “The Money Clip.” This week, The Money Clip deals with some unusual ways to repay student loans.
Last Tuesday, we directed you to a Reddit IAmA conducted by Betsy Mayotte, the director of regulatory compliance at American Student Assistance (our parent company). Betsy knows her stuff—she helps borrowers, schools, and lenders follow higher education rules.
Throughout her IAmA, she offered great advice on topics like applying for financial aid, income-based repayment, and loan consolidation. Since we can’t fit her 700+ answers here, we’ve picked 3 responses (bolded below) that she started with a single word: “Wow.”
Yes, some stories surprise even the experts. So while reading student loan advice on Reddit may not be as fun as reading Aziz Ansari hate on Jerry, it can still be pretty interesting—and a lot more helpful if you’re experiencing a similar situation.
(Warning: Some passionate language ahead.)
“I went to a vocational college for 1.5 years from 2007 to 2009, and paid around $800/month to go there. Once I decided it wasn’t for me, that’s when I really got screwed. Neither I nor my parents remember signing off any student loans for this school (hence the paying out of pocket every month). I was slapped with over $20k in student loans for my short time there. After much arguing, they dropped it down to around $8k. We were very hesitant about this. With thoughts like “if they were willing to cut that loan down so much, they can’t believe that they are 100% accurate in the loans that we owe.” We are dealing with the loans, but would still like questions answered. Have you had any similar situation from people who went to a smaller college for a trade/skill and got hit with loans in this way?”
Wow, that does sounds strange. They can’t be federal loans as they never would have dropped it like that. I’d ask for copies of the promissory notes and proof of where they money went. If you still think there is something fishy, you can work with either your states attorney general’s office (file a complaint) or the consumer finance protection bureau for assistance.
“I’ve had issues with this in the past and would like a professional perspective on this. Why are loan companies so reticent to provide a military deferment or interest rate reduction under the SCRA when a service member is on active duty? Myself and others I’ve spoken to have gotten constant static from companies, complete lack of co-operation, and in some cases the companies have outright denied the paperwork sent to them on technicalities.”
Wow—I am surprised and dismayed to hear this!! Anyone I talk to would tell you that they will do whatever they can fulfill these requests. I know higher ups would want to know if there was a problem here so I would say if you run into this, contact the servicers ombudsman office—if they don’t have one—contact the federal Department of Education ombudsman at www.ombudsman.ed.gov.
“Hello, and thank you for taking the time to do this AMA, you’re awesome. Here is my question/situation: I attended law school at a tier 3 California ABA accredited school for one semester. After telling me at the beginning that my student loans had been squared away, I began attendance. It was about three weeks before the end of the semester that they told me one of my largest loans had been turned down due to credit issues and that if I didn’t pay the remainder of the tuition, $15,000, I would have to withdraw until I had the funds. Needless to say, I had to leave and although I have currently found a job I love, I have this $15,000 law school debt hanging over my head. When I went in to appeal this decision, the financial aid counselor told me, “Not to feel bad because this computer error happened to other students, as well.” WTF?”
Wow—this is a situation I’ve not seen before. Do you even owe that much since you withdrew? I’d check their refund policies—they should be online. If you feel like this was not a legit transaction, you might consider filing a complaint with the state attorney general’s office. They can help, but they will also probably do something about it if they see a trend and that consumers are being harmed.
You can check out Betsy’s complete IAmA here. You can also get an answer to your student loan questions from her or another expert at American Student Assistance by visiting Ask American Student Assistance.