Have a student loan with Sallie Mae? Be very afraid.
Repaying your student loans shouldn’t be scary.
Unfortunately, the shady practices of some student loan servicers have got us spooked.
Sallie Mae under investigation for student loan practices
According to Delaware Online, the Consumer Financial Protection Bureau (CFPB) and two other government agencies are investigating Sallie Mae for improperly applying payments from student loan borrowers with multiple loans in a way that led to higher interest costs for the borrower.
This means that if you have a student loan with Sallie Mae, your good behaviors, such as paying more than your monthly payment, may have been applied to low-interest loans first, even though it’s more beneficial for payments to go toward high-interest loans. And if you were sending partial payments, they were divided in the opposite way in order to maximize late fees.
As we wrote earlier this month, 49% of all complaints to the CFPB about private student loans were from Sallie Mae customers. This is, however, about equal to Sallie Mae’s share of the total private student loan market, according to the CFPB.
If the investigation finds that Sallie Mae took advantage of borrowers by unfairly allocating their payments, the company could be forced to pay fines or restitution. But it probably won’t be much help for the millions of student loan borrowers struggling to their loans as interest adds up every day.
Don’t let your student loan servicer take advantage of you
This investigation serves as a wake-up call to borrowers that their student loan servicer isn’t looking out for their best interests. It may not be fair, but servicers put it on borrowers to figure out the repayment process on their own.
That’s why we work with student loan borrowers to help them allocate their student loan payments in the most beneficial way to minimize interest and pay off their loans faster. If you’re interested in learning more, call Rick and Andy at 1-888-234-3907 for a free consultation or fill out our contact form.
Have you had any sour experiences with Sallie Mae or any other student loan servicers? Tweet us at @CFGCollege or let us know in the comments below.