Question:
Dear Steve,
Graduated in 2007. Took out small loans with Sallie Mae and ACS. Sallie Mae is now Navient and ACS is now Conduent. I lost my paperwork and after many attempts including CFPB, Sallie Mae (Navient) responded with a marketing piece saying how wonderful they were, but no original paperwork: they say I owe them over 35K after paying $300 a month for ten years, they also keep changing the payments saying I did not pay enough and therefore I am in the arrears. I asked the same of ACS now Conduent with the almost the same result: they sent me a piece of paper with blacked out lines, no signature and an amount of $4800. They claim I owe them more than 25K but cannot or will not produce paperwork with my signature.
Should I stop paying and force them to produce evidence I owe them this money.
Pat
Answer:
Dear Pat,
Thank you for sending me some additional documentation with your question. The letter Conduent Education Services (CES) sent does provide some good information to go off of.
CES says they are the servicers of a federal student loan owed by PNC bank. CES states you borrowed a total of $28,875 and that you’ve made a total of $18,957 in payments. But here is the important part, “Of this, $8,659.65 has been applied to principal, $10,270.29 to interest, and $27.97 to late charges. His current principal balance is $26,074.75.”
The next two paragraphs help to explain why so much went towards interest and why your balance is still so high. CES says, “[X] is utilizing the Graduated Repayment Plan. The Graduated Repayment Plan offers lower payments during the first years of repayment with payments increasing every 24 months until the loan is paid in full. This plan results in higher interest costs than the Level Repayment Plan over the life of the loan.
[X] has also had a total of $5,859.40 in interest added to his balance as the result of capitalized interest. At the end of a deferment or forbearance, unpaid outstanding interest will capitalize (be added) to the principal balance. While in deferment, the customer is responsible for interest that accrues on the unsubsidized portion of the loan. While in forbearance, the customer is responsible for interest that will accrue on the entire balance. Since the account entered repayment, Mr. McAndrew has used 45 months of deferment and 7 months of forbearance.”
When it comes to federal student loans the ultimate validation for the current balance owed is through the National Student Loan Data System. If you login to that federal portal it should confirm the balance due.
Frankly I’m amazed you got CES, or any servicer, to send you such a detailed letter of how your account reached its current status. The fact you received such a letter is impressive.
How Conduent Came Up With the Balance
However the explanation Conduent gives for how your current balance is what it is, does make sense. The fact you are on a payment plan that is artificially low during the early years, you were in deferment for almost four years, and you’ve had seven months of forbearance does explain how the balance has not made much progress.
One face value I would have no reason to dispute the position of CES but if you wanted to push this further I would suggest you think about hiring a lawyer who is experienced in handling student loan issues. You could try here or here.
Ultimately the concern is one of contract law and an accounting of where the money went and how much you borrowed. But logging into the National Student Loan Data System can show you how much you borrowed and when. CES says, “Our records show that 19 disbursements were sent” to your school.
I would guess they only sent you one Master Promissory Note (MPN) as an example of the type of Note you did sign. Granted, that’s not a full validation of a debt but then again, the Government doesn’t really do what you are asking. That’s why I’m suggesting an attorney to poke them along if you want more detailed information.
If you want to reduce the amount you owe on your loans, you should send more each month or select a different repayment plan. Ultimately the 10-year standard repayment plan is the option that can pay the debt off the fastest, with the least amount of interest. However, the monthly payment is going to be more expensive. It looks like if you made a $300 payment on the standard repayment plan for the next 120 months your payment would be $316 a month and you’d repay a total of $37,962 more from this point.
Other repayment options like the income driven plans can just add more interest onto the balance you owe and inflate the overall amount you owe further. That works if you plan to not make a lot of money during the next 20-25 years. You might want to read Why Income Based Student Loan Payments Can Be a Terrible Trap.