I am currently in AES hell - have been for 2 years now. I got pregnant and had to leave school to have my child - I got the 6 month grace period and then they started hounding. I applied for a deferrment because I was pregnant and had a high-risk pregnancy and could not work or afford the payments. It was a run around - my Dr had to fax them forms and then she would and then they would say they had not received them. This went on for about a month - all while they are threatening to report me for non payment, etc. Finally I sent a letter return receipt requested with all the forms, threatening to tell the Attorney General about them, and suddenly I was deferred - imagine that.

But they would only give me the 6 week post partum because I had an emergency c-section - then it was back to the harrassing. I had to stay home with my baby due to her health problems and the fact that daycare is so expensive here, so I filed for an economic hardship forbearance - by the end of that, I had to file for food stamps to get them to grant me a measly 6-month deferrment (mind you, all the time I spent battling them counted in this, so really it only ended up being a 4 month deferment.

It is now up and I requested the usual forms to defer again - after they ignored my emails for a week, I finally got an email saying I've maxed out my deferment time - WHAT?! All my other loans give you 3, 1 year deferments before you have maxed! I'm furious and asked them to provide me a link ontheir site where it states this. I'm getting ready to contact the attorney general and BBB on them, they have horrible communication and misleading practices.

Your Emails: AES / Deferment Requests

Thank you for this website. I too am living the student loan nightmare. I am a parent who has cosigned for student loans for my son. His requests for deferrals and hardship forbearance since he is still in medical school have been ignored and I receive phone calls daily from PHEAA threatening to ruin my credit rating if I do not make payment. I am filing a complaint with the Attorney General for the state of Michigan. I do very much appreciate the links you provided. I feel like crying but I don't have any more tears.

Your Emails: Sallie Mae / Loan Forgivness

My husband and I are both teachers in the state of Oklahoma . We met in college and both had student loans. My husband had much more debt than I. He had Perkins and Stafford Loans. Upon our marriage and subsequent graduation from college we began teaching. We started to have to pay off two loans to Sallie Mae, which we couldn’t afford. Then they offered us the chance to consolidate our loans, which we gladly accepted. We have both taught in high poverty schools now for over ten years. My husband was told that his Perkins loans (app. $10,000) would be forgiven in certain percentages for each year taught. So about a year ago, after having taught for a long time we decided it was time to take the state up on their forgiveness of the Perkins Loan. We contacted Sallie Mae which told us to fill out a form, we did and said we were not eligible. One year later, hours and hours of phone calls, and several trips and phone calls with our state dept. of education- still no forgiveness.

This is what they are saying- The state of Oklahoma is willing to pay for the loan, they say will meet all qualifications. Sallie Mae says they will not accept the payment because we don’t qualify. This is their reasoning. They said that when we consolidated our loans, our individual loans ceased to exist, and that is why our claim isn’t valid. I asked them to show me in our paperwork where there was a statement to that effect-none has been provided. If the people giving the money are willing to pay, what is the problem? Their greed, poor communication, and lack of common sense is amazing.

I am at my wits end about what to do. The injustice of it all makes me sick. I am going to fight this, all the while, dutifully paying my monthly payments! Any help you can provide or attention to this problem would be greatly appreciated.

Student Loan Company Aims to Stop the Deception

Nonprofit Student Assistance Foundation gives straight answers to students seeking loans and grants

Helena, MT (PRWEB) June 18, 2007 -- Before various lawsuits and complaints regarding deceptive student loan advertising came to light earlier this year, Student Assistance Foundation launched a new Web site to deflect deception and offer students a place to get their questions about student borrowing answered honestly. Stop the Deception is the nonprofit student loan company's latest effort in giving students straight and truthful answers when it comes to the often-confusing subjects of student loan debt and consolidation.
"It's particularly important for graduates to read the fine print to make sure they fully understand the terms of the loan and to make sure the company they choose has the customers' best interests in mind," said Jamie Lee, loan sales supervisor at SAF. "This site helps students to do that."
According to Lee, SAF intends to continue to expand the site to identify confusing practices in the student loan industry as they come into play in order to help students negotiate the loan process successfully.
Students may be confused and misguided about many aspects of managing and paying off private or federal student loans. Since most college loans are repaid after graduation, students may not be able to perceive the reality of their debt and engage in careless spending without consequences throughout college years. Students can get caught up in using loan money for items outside of legitimate school expenses -- like trips or pets, for example. Students are sometimes led to believe they can borrow unrealistic amounts that are far above what they can repay in a reasonable amount of time. Later in the life of the loan, when it comes time to consider student loan consolidation programs, students can become even more confused.
Student Assistance Foundation offers several tips to help stop the deception:
Find someone you trust. Ask friends and family what they've done. Then find a trusted, knowledgeable lender with good customer service.
Set a budget and stick to it. Learn what you can afford to borrow and don't exceed it. Then keep a record of how you intend to spend your loan.
Do your research. If it sounds too good to be true, it probably is. Look into as many lenders as you can to compare and contrast their services and gauge their commitment to the customer.
Get out of prison. Think of student debt like it's a prison and make it a priority to get out as soon as possible.
Know your benefits and rates. Some low rates apply to only a few people and some benefits get pulled easier than you think. Know the terms and conditions of all money you borrow.
Start repayment on time. Don't put off repaying your student loans. Get into the habit of making more than the minimum payment.To get straight answers about student loans visit or call Student Assistance Foundation at (800) 852-2761 ext. 9750.


Kennedy requests information from Sallie Mae

Washington Business Journal - 1:51 PM EDT Friday, April 27, 2007
by Neil Adler
Staff Reporter

Sen. Edward Kennedy, D-Mass., has requested information and documents from Sallie Mae and another student lender because of concerns about their collections process and the possible use of tactics prohibited by federal law and regulations.
Kennedy, chairman of the Senate Health, Education, Labor and Pensions committee, sent letters April 26 to Tim Fitzpatrick, CEO of Reston-based SLM (NYSE: SLM), commonly known as Sallie Mae, and Michael Dunlap, chairman and CEO of Lincoln, Neb.-based Nelnet (NYSE: NNI).
In the letter to Fitzpatrick, Kennedy wrote: "Specifically, I am concerned that several private lenders may be engaging in harsh and inappropriate tactics with regard to borrowers whose payments are overdue and or whose loans are in the collections process, tactics that are prohibited by federal law and regulations."
Kennedy says that his office has obtained information that Sallie Mae, which has agreed to be acquired by a private investor group for $25 billion, may have engaged in practices such as:
Attempting to collect debts not owed.
Firing employees who attempt to help borrowers obtain correct information about their loan status.
Instructing employees to give borrowers "the run around" rather than provide them with correct information on their loan status.
Intentionally sending loan payment notices to an incorrect address to force a borrower's account into default.
Sallie Mae will cooperate with Kennedy's request for information but doesn't like the way the inquiry has been handled so far, says company spokesman Tom Joyce.
Kennedy's office never contacted Sallie Mae about the senator's concerns, "even though we have been in regular contact with his staff," Joyce says. "In fact, the media received this letter before we did. It raises the question as to whether the facts are important in this inquiry, and whether the matter has been prejudged."
Sallie Mae's work, along with that of others in the student loan industry, has helped push default levels to "record lows" and assisted borrowers with keeping healthy credit records, Joyce says.
In Kennedy's letter to Dunlap, he wrote that his office received information indicating the company may have violated federal law and regulations by refusing to provide loan and payment history information to defaulted borrowers and inappropriately consolidating loans without the borrower's consent.
Nelnet officials couldn't be reached for immediate comment.


Lenders Misusing Student Database

Improper Searches Raise Privacy Fears

By Amit R. Paley Washington Post Staff Writer
Sunday, April 15, 2007; A01

Some lending companies with access to a national database that contains confidential information on tens of millions of student borrowers have repeatedly searched it in ways that violate federal rules, raising alarms about data mining and abuse of privacy, government and university officials said.
The improper searching has grown so pervasive that officials said the Education Department is considering a temporary shutdown of the government-run database to review access policies and tighten security. Some worry that businesses are trolling for marketing data they can use to bombard students with mass mailings or other solicitations.
Students' Social Security numbers, e-mail addresses, phone numbers, birth dates and sensitive financial information such as loan balances are in the database, which contains 60 million student records and is covered by federal privacy laws. "We are just in shock that student data could be compromised like this," said Nancy Hoover, director of financial aid at Denison University in Ohio.
Education Department spokeswoman Katherine McLane said the agency has spent more than $650,000 since 2003 to safeguard the database. The department has blocked thousands of users that it deemed unqualified for access after security reviews, McLane said, and it has blocked 246 users from the student loan industry for inappropriately accessing the data.
In general, the department allows lenders to search records in the database only if they have a student's permission or a financial relationship with the student.
The department has been "vigilant in its monitoring for unauthorized uses" of the database, McLane said.
Concerns about possible abuses of the database are emerging as the student loan industry is under investigation by congressional Democrats and the New York attorney general. Critics say the $85 billion-a-year industry has cozied up to government and university officials who are in a position to help lenders.
This month, a previously obscure Education Department official named Matteo Fontana was suspended after the revelation that he owned more than $100,000 worth of stock in a student loan company while he worked in a unit that helped oversee the industry -- and the student loan database. The stock holding raised questions about a possible violation of conflict-of-interest rules.
The database, known as the National Student Loan Data System, was created in 1993 to help determine whether students are eligible for student aid and to assist in collecting loan payments. About 29,000 university financial aid administrators and 7,500 loan company employees have access to it.
In a recent meeting with university financial aid directors, Theresa S. Shaw, chief operating officer of the department's Office of Federal Student Aid, which manages the database, said lenders have been mining it for student data with increasing frequency, according to three participants at the meeting. In the department's hierarchy, Shaw ranks above Fontana.
"She said the data mining had gotten out of control, and they were trying to tone it down," said Eileen K. O'Leary, director of student aid and finance at Stonehill College in Massachusetts, who was at the Feb. 26 session. "They'd seen the mining for a few years, but now they felt it had grown exponentially."
The department first started noticing a problem in mid-2003 when loan consolidation became more popular, according to an agency official who spoke on condition of anonymity because of the sensitivity of the matter. As companies began to aggressively look for low-risk borrowers to target for consolidation plans, they turned to the database for prospective customers, the official said.
Database users can view only one student record at a time, and the department can monitor each time they view an entry. "When we see them go in and out very quickly, that's when it raises flags" about data mining, the official said. Such abuse would violate department rules.
Officials grew so concerned that in April 2005, the department sent out a letter to database users warning that inappropriate use of the system -- in other words, looking for information without authorization -- could cause their access to be revoked. The letter said the agency was "specifically troubled" that lenders were giving unauthorized users -- such as marketing firms, collection agencies and loan brokerage firms -- the ability to access the database.
"Information may not be used for any other purpose, including the marketing of student loans or other products," wrote Fontana, then general manager of a unit in the department that oversaw the lending industry.
In August 2005, Cathy H. Lewis, the department's assistant inspector general, echoed those concerns in a memo to Shaw that warned of security problems with the database and the lack of regular audit trails on the system.
Through a spokeswoman, Shaw declined to comment. Fontana did not return telephone calls.
After the warnings, inappropriate usage of the system seemed to decline, according to the department official who requested anonymity. But several months ago, top managers learned that the practice had resumed -- "a pattern that's very alarming," the official said.
Some senior education officials are advocating a temporary shutdown of access to the database until tighter security measures can be put in place, the official said. McLane confirmed that such deliberations are taking place.
It is not certain that the lenders that inappropriately used the database used information from it to market directly to students. Credit bureaus, for instance, also hold personal information on borrowers that can be used to solicit customers.
But department officials believe lenders are probably using the database for marketing, according to three current and former agency employees who spoke on condition of anonymity for fear of retribution. Some university financial aid administrators suspect loan companies are probably targeting students in the database who take out loans directly with the government, known as direct loans.
"The database is being misused by the industry to raid the direct loan portfolio," said Craig Munier, director of scholarships and financial aid at the University of Nebraska at Lincoln, who was at the meeting with Shaw. "It's certainly a misuse of the intended purpose of the information and was certainly not what we intended in the higher education community when we built" the database.
Some financial aid directors say abuse of the database would explain why some students who have taken out loans only directly with the government are deluged by up to a half-dozen solicitations a day from private loan companies.
"Our students are being inundated with marketing from consolidation companies," said O'Leary, of Stonehill College. "How else are the consolidation companies getting our students' information?"
Some financial aid administrators hope inquiries into the student loan industry will extend to the possible abuse of the database.
"We are hoping that a full congressional investigation can happen," said Hoover, the Denison aid director, who also met with Shaw. "And maybe then we will find out what's really happening."


read more digg story

Be Wary of Loan Letters

Official-looking mailings can bamboozle students
By Kimberly Palmer
Posted 4/8/07
Jessica Coulter, a first-year law student at Regent University in Virginia Beach, Va., worried when she started getting letters marked "confidential" and "open immediately" in the mail shortly after taking out student loans. Because they looked official and time-sensitive, she assumed they were from her loan company. When she opened them, she found information about loan payment programs, some of which suggested immediate deposits. "I got really scared. I thought the whole point of loans was that you don't pay them back for three years," she says.

After consulting classmates with student loans, Coulter learned that the letters were just advertisements. Now, they quickly go from her mailbox to the trash. But she is hardly the only one fooled by such letters.
Hard sell. According to student loan borrowers and consumer advocates, loan companies increasingly send solicitations that resemble actual loan documents or government-issued letters. "Direct-to-consumer marketing for student loans has exploded," says Luke Swarthout, higher education advocate for U.S. PIRG, a public interest advocacy group. "We're seeing the propagation of these types of aggressive, sometimes misleading mailings."
Rebecca Thompson, legislative director for the U.S. Student Association, says students are especially vulnerable to such solicitations. "It's confusing for the average student ... especially if it is the first time they have ever taken out a loan," she says, adding that many students don't know which loan company they are actually using.
Collegiate Funding Services, part of JPMorgan Chase, sends solicitations marked "final attempt" in red on the envelope. The letter inside says it is from the "Student Loan Department" and bears an insignia with a book and leaves inside a circle within a circle. The federal Education Department's insignia is a tree within a circle inside a circle.
Swarthout expressed concern that such an insignia could be confused with that of the Department of Education. He also takes umbrage with the first sentence of the letter, which reads, "We're writing to make sure you are aware that if you don't contact us now, you could end up paying significantly more on your monthly student loan payments than necessary." While Swarthout acknowledges that the statement could be true, because the company offers loan consolidation services, he says consumers could interpret it as meaning they have to call or their current rates could go up.
Greg Hassell, spokesman for Collegiate Funding Services, says that the letter is not deceptive and that there is no suggestion that it is from the government. "It's clear who it's from and what it's for," he says.
Graduate Loan Associates, a San Diego-based loan consolidation company, also stamps its letters with a circle-within-a-circle insignia that reads "Department of Student Finance." (Graduate Loan Associates did not respond to repeated requests for comment.) Letters from Class One Associates, also in San Diego, are stamped with a spread-winged eagle, a symbol often associated with the U.S. government. (The company said no one was available to comment.)
Sallie Mae, the nation's largest student loan company, sends letters marked "final notice" to potential customers, but the company says it does so only when there is an offer with a pending deadline inside, such as an expiration date for preapproved status. Tom Joyce, a Sallie Mae vice president, says, "It is, at best, misleading to use the term 'final notice' on those marketing solicitations that either have no deadline or contain no time-sensitive information. Eligible student loan customers can consolidate at any time, so anything that implies a final notice should be reserved for a pending deadline, such as an upcoming interest-rate change, or for an expiring offer, such as a special borrower benefit rebate or discount."
Joyce criticizes what he sees as increasingly aggressive and misleading materials distributed by other lenders. "I look at some of that stuff, and I'm fooled by it-and I'm in this business," he says.
Making a case. Deanne Loonin, a staff attorney at the Boston-based nonprofit National Consumer Law Center, says, "If people think they're getting [letters] from the government, then it could be an unfair business practice." To build a case against a company, a consumer who was confused by the mailings would probably have to show that emotional distress or harm was inflicted, such as signing up for loan services under a false pretense, she adds.

The Education Department's Federal Student Aid Ombudsman, which resolves disputes between federal loan lenders and borrowers, says it has received some 100 complaints about loan consolidators using marketing materials that suggest they are affiliated with the federal government. The ombudsman generally forwards such complaints to the Federal Trade Commission, the agency responsible for administering consumer protection laws. The FTC reports that it has received 583 complaints about deceptive marketing practices by student loan lenders and consolidators since 2000. One consumer filed a complaint in February after her daughter was misled into believing that a consolidator was a government agency and as a result shared her Social Security number with the company. The FTC would not say whether it was investigating student loan marketing practices.

So far, Loonin says, she knows of no cases of student loan borrowers taking companies to court for allegedly deceptive marketing practices. But that could soon change. Coulter, the law student, says, only half-jokingly, "I'll sue them in 2 1/2 years."

This story appears in the April 16, 2007 print edition of U.S. News & World Report.


Student loan task force launched

AP Education Writer

A federal task force will examine the ties between lenders and college financial aid officers amid growing concerns about student loans, Education Secretary Margaret Spellings said Tuesday.
New York Attorney General Andrew Cuomo, scheduled to testify before Congress on Wednesday, has been leading an investigation into the issue, and other attorneys general are joining him. Cuomo said Spellings' move was "too little, too late."
Cuomo says his investigators uncovered numerous arrangements that benefited schools and lenders at the expense of students. For example, investigators say lenders have provided trips for college financial aid officers who then steered students to the lenders.
The department's task force will be made up of Education Department officials. A panel of outside experts that included lenders, colleges and student representatives failed last week to agree on how the department should proceed with regulations covering relations between colleges and lenders.
Luke Swarthout, who lobbies on higher education issues for the U.S. Public Interest Research Group, represented students on the now-defunct panel. He said the process was doomed from the start. "There's only so much real reform you can push if the industry that needs to be reformed has a veto," he said.
The department's internal task force has been asked to look at preferred lender lists, in which colleges recommend certain lenders to students; inducements lenders make to colleges to gain preferential status and a federal database that has raised worries that lenders have mined it for financial information about students. The department recently banned lenders from accessing the database.
Spellings said she wants the task force to report back in about a month with recommendations for new federal regulations.
Republicans and Democrats in Congress also are pushing legislative fixes to the kind of problems Cuomo highlighted. Some lawmakers want to write into law a code of conduct that several schools and lenders recently agreed to abide by as part of a settlement with the attorneys general.
The code would ban lenders from paying colleges in exchange for being designated a preferred lender. It also would ban lenders from paying for trips for financial aid officers and other college officials. Lenders also would not be allowed to pay college employees to serve on advisory boards.
"The reforms we are pursuing in Congress, together with the work of the secretary's task force, will provide added help to families paying their college bills, restore trust in our student loan program and make abuses within the system illegal," said Sen. Edward Kennedy (news, bio, voting record), D-Mass., who chairs the Senate education committee.
But California Democratic Rep. George Miller (news, bio, voting record), who chairs the House education committee, said Spellings should do more than form a task force. He has urged her to temporarily ban the use of preferred lender lists. He isn't alone in questioning how much the task force will accomplish.
Jon Oberg, a former Education Department researcher who uncovered a scheme in which lenders improperly sought an artificially high rate of return on loans, said the department's oversight of the industry has been weak.
"I'm happy that the attorney general of New York and now others are exercising some oversight," Oberg said. "Actually the problem should have been addressed much earlier by Congress and the department, because these problems have been known for some time."
The department has had its own problems with the loan system. A senior department student aid official, Matteo Fontana, has been placed on leave pending an investigation into his holding of at least $100,000 in stock in Education Lending Group, the former parent company of Student Loan Xpress — a company Cuomo is investigating.
The Wall Street Journal reported Tuesday that a second student aid official in the department, Michael Sutphin, reported holding more than $50,000 in stock in student-loan giant Sallie Mae. According to disclosure forms, he held the shares until the spring of 2004.
Under department guidelines, ownership in stock valued at more than $15,000 prevents an employee from working on issues related to that company. A note in Sutphin's file initially disqualified him from working on issues related to his Sallie Mae holdings. Subsequent reports showed he continued to own some shares, though under the $15,000 threshold.
Education Department spokeswoman Katherine McLane said Tuesday she knew of no wrongdoing in Sutphin's case. "There's a process. He complied with it. Our ethics office complied with it," she said.

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