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Old 01-30-2015, 07:25 PM
 
4,236 posts, read 8,111,447 times
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I noticed none of my auto debit payment was not applied towards the loan with the highest rate this month. I did pay off one loan in full this month, but I don’t think that has anything to do with it.

I also noticed my interest statement is totally inaccurate in my favor.

I can’t wait for this monkey called student loans to be taken in the back forty and shot later this summer. I’m so close.

I have emailed them. It will be interesting to see what the response is.
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Old 01-30-2015, 07:27 PM
 
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i could be wrong, but i believe this is typically something within the borrower's control.

glad you emailed them. calling would probably be better but emailing is a good first step.
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Old 01-30-2015, 08:06 PM
 
Location: Berkeley Neighborhood, Denver, CO USA
17,693 posts, read 29,691,842 times
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Do bears poop in the woods?
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Old 01-30-2015, 08:30 PM
 
Location: I am right here.
4,977 posts, read 5,744,173 times
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Quote:
Originally Posted by davebarnes View Post
Do bears poop in the woods?
I would imagine that would depend WHERE the bear was when it had to poop. If the bear was in a zoo exhibit, for example, there would be no 'woods', per se, only an exhibit, perhaps with limited trees, not really considered a true "woods", so in that case, no, the bear would NOT be pooping in the woods.

Similarly, if a bear was traipsing through a meadow or field when it felt the urge, it would likely poop in the field. In the fairy tale Goldilocks and the 3 Bears, one could assume that the bears pooped indoors, since the 3 bears had beds inside a structure. One could assume the bears either had indoor plumbing or perhaps an outhouse, neither of which would be considered "in the woods".

Finally, let's consider the polar bears. There are no woods where most polar bears live; therefore, again, no, the polar bear would not be pooping in the woods.

OP, call the loan servicing company.
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Old 01-31-2015, 12:29 PM
 
78 posts, read 125,099 times
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My husband made a large payment towards his student loans and we noticed that they applied the payment towards his lower interest loan that was larger instead of the smaller one with the higher rate that the payment would have paid off in full, which was our intent when he made the payment. He called them and they immediately agreed to move it to the loan he requested it be applied to.
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Old 01-31-2015, 12:34 PM
 
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If it is a federal loan, they are required, by law, to apply payments to the highest interest loan first. I'm not sure if this applies to loans older than the law.
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Old 01-31-2015, 12:51 PM
 
4,236 posts, read 8,111,447 times
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Quote:
Originally Posted by Mr.Hospitality View Post
If it is a federal loan, they are required, by law, to apply payments to the highest interest loan first. I'm not sure if this applies to loans older than the law.
It's a Fed loans that are not very old. I'll have to wait until Monday to find out what the deal is.

Does anyone know how these "service providers" make money managing loans for the dept of education?
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Old 02-02-2015, 11:28 AM
 
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Quote:
Originally Posted by Mr.Hospitality View Post
If it is a federal loan, they are required, by law, to apply payments to the highest interest loan first. I'm not sure if this applies to loans older than the law.
That's not true at all. Scheduled payments are divided proportionately so that the amortization rate is constant amongst all the loans in your portfolio. There are a number of factors that can complicate the actual math, but in general if the length of repayment is constant, that should skew payments towards the higher rate loans, since larger payments are necessary to hold the amortization on the same rate [skewed after weighting for principal balance, that is].

Now, if they're federal loans and the servicer is intentionally skewing your scheduled payments towards the lower rate loans, that is suspicious.

However, one thing that can throw it off is if you've been making additional "optional" payments on your higher rate loans on top of your scheduled payments. If you've inadvertently been marking those as "advanced payments" then they can probably technically justify the way they're handling your current payments. But they should still be willing to clear that up if you give them a call (at least for the most recent month), particularly if you talk to someone higher up the ladder.



Quote:
Does anyone know how these "service providers" make money managing loans for the dept of education?
It depends on whether they are federal loans, of course, but even within that the payment structure depends on whether it's a "Direct Loan" or a "FFEL" loan. In FFEL the loan is privately held but federally guaranteed, so the entire payment is revenue for the servicer/lender. If you default, they collect the entirety of those fees as well, and if you just don't pay at all, then they collect from the taxpayer. (In many cases the servicer is a subsidiary of the lender, though not always). And they own the loan, so the feds don't really have standing to take the loan away from them.

In Direct Lending the servicer is paid a fee based on the volume of loans held and the status of the loans. DL Servicers could eke out some small advantage by inappropriately handling payments but it would be fairly marginal, but there's more political risk for them in trying to exploit the system as well since unlike FFEL they don't own the debt and aren't guaranteed any future revenue if they misbehave badly enough to get cut from the servicing contract.
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Old 02-03-2015, 04:02 PM
 
4,236 posts, read 8,111,447 times
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I did get the one size fits all generic email today that said they could not discuss loan details via email.

So I decided to call and they told me the reason that none of the payment was applied is because that loan is paid up until Dec of 2017. Which is BS considering I’ve only made the minimum payment on that loan over the last year.

I did pay off two loans last year, but my minimum payment dropped with each loan payoff. I’m going write them and have them remove the paid ahead status. What really gets my goat is they put me old hold and promptly hung up on me.

I think there’s another reason why they won’t discuss thing loans in writing and it’s because the servicer is trying to cover their butt.

I did call back and they told me it was a system error when it came to applying the payment.

I was also told my 1098E Interest statement was correct. It's about as phony as the accounting at Enron. The $$ amount on the interest statement is so high that it's not possible.

Last edited by Fargobound; 02-03-2015 at 04:28 PM..
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Old 02-03-2015, 07:59 PM
 
Location: California
37,097 posts, read 42,098,467 times
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My daughters were applied across the board. I TRIED to force a payment to apply to one particular loan but it didn't work. And it was Federal, they don't have to do anything and it's all explained in the fine print.
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