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The Student Loan Shuffle

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Posted on Apr 24, 2012
DonkeyHotey (CC-BY-2.0)

By Marian Wang, ProPublica

(Page 2)

“I wanted to continue making payments regardless of what their problem was,” Mahnk explained. But she’s still concerned about how things will shake out. “I’m only taking their word on it that my payment is fine, and that EdFinancial is going to do everything they’re supposed to do.” 

EdFinancial did not respond to a request for comment.

Some borrowers were notified of the switch only after the fact. “There was really no prior warning,” said Scott Trudeau, a borrower whose loans were transferred to Mohela in late January. Trudeau, who said he’s never fallen behind on his loans, has had recurring problems since the switchover trying to correct his bank account information with Mohela. 

“I get delinquency notices regularly, I get letters in the mail, but every time I try to give them money, the system breaks down,” he said. “I’ve had no trouble with the Department of Education all these years, but it’s been nothing but confusion with Mohela.”

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“Anytime you change a servicing relationship, it can cause concern,” said Will Shaffner, Mohela’s director of business development and government relations. “They need to pick up the phone and call us. If they’re not satisfied with our service or aren’t getting answers, they should ask to speak with a supervisor. They can even get in touch with our CEO if they need to.” 

The Department of Education’s own implementation schedule shows that the transition is still a work in progress and the phasing in of new servicers is being pushed back.

“FSA has been working aggressively to implement the new not-for-profit servicers,” the document reads. “Our original schedule did not fully accommodate the level of effort required to bring up servicers in a way that minimizes risks for borrowers, FSA, and the not-for-profits themselves.” 

 


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By heterochromatic, April 25, 2012 at 1:24 pm Link to this comment

Connie—- thanks for the info.

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prisnersdilema's avatar

By prisnersdilema, April 24, 2012 at 5:27 pm Link to this comment

They will stall and stall till after the elections. Just remember non profit doesn’t mean
you can’t get rich. It sounds nicer, but salaries at those companies can be astronomical,
just so no money is left on the table, when the cops run in. What happened to student
loan reform? Goldman Sachs wins again.

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By Connie, April 24, 2012 at 5:24 pm Link to this comment
(Unregistered commenter)

I work for a government contractor which the accounts for the Department of Education as
a customer service representative.  I have heard the complaints about the services for the
last four months since I started working there.  They are, to say the least, rightfully angry
they were never given warning.  Payments frequently go missing once the accounts are
transferred to the servicers, and many of the callers tell me their credit is now ruined
because of DOEd’s blatant lack of transparency with the borrowers. 
    This is the least of the problems with the Education Departtment.  The entire
department is simply rife with corruption with regard to student loans, and trust me, the
servicers are simply the tip of the iceberg.  The contractor is actually owned by General
Dynamics, the fourth largest defence contractor, with profits in the billions but has not paid
any corporate taxes since 2009, and chances are, with it’s acquisition of Vangent, the
contractor (which, by the way, also handles Medicare, and whose “beneficiaries” are
being swindled by Big Pharma and the insurance companies). 
    I could go on, but I have a feeling I’d run out of space.

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By berneredfeathers1, April 24, 2012 at 10:59 am Link to this comment
(Unregistered commenter)

This article shows that the finance world is a shell game where those with loans
are manipulated from one shell account to another. When Citibank was having
trouble I was shifted to CIBC. The banks buy and trade accounts just like any other
derivative. These maneuvers, I think, are behind the problems that European
countries are having and the consequence that their debt is shifted to more sticky
fingers. Corporations and governments like in Greece are complicit in the game
and the result is the enslavement of the populations. Housing prices have dropped
in the U.S. for the sixth straight month. In my view this is indicative of people that
are catching on to the shell game. If people lose faith in the hope of winning at
the shell game, they walk away and don’t play. This does not bode well for the
future of the global economy.

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