Recent news warns of a possible student loan debt crisis like that of the latest real estate bubble – and it’s ready to pop. As CNBC reported on February 14, 2012, parents alone owe more than $100 billion in student loan debt. Even more worrisome, this number only accounts for a mere 10 percent of the total student loan debt in this country.
Our propensity to borrow more money than is easily re-payable explains a grand portion of the problem; but where do the students, forced to pay at the hands of a financial aid mistake, fit in?
This is a recount of a true college loan horror story, told through the letter that saved a local Maryland student $9,000. After receiving a different loan amount than what was awarded and errant information regarding leftover funds for living expenses, the student was forced to withdraw from the out-of-state college she attended and move back to Maryland. While in the process of protesting repayment for classes she did not take, her account was sent to collections and her queries were ignored. When all else failed, she turned to pen and paper to set her free from the woes of looming school loan debt.
(Names have been changed to protect the privacy of all involved.)
“Dear CollegeX President,
I am writing in regards to an unjust financial claim placed upon me by CollegeX. I have exhausted all of the normal avenues to correct this problem without avail, and request your assistance so that I can avoid the need to consult an attorney. The circumstances are as follows:
I was awarded $7500 in financial aid to attend CollegeX for spring semester 20XX. I called the Financial Aid Department to speak with LadyA, whom I had worked with previously, to ask how much money I could depend on receiving back, after tuition and fees were paid, to help pay for my living expenses. The woman on the phone said that she could look up my file herself and quoted me approximately $2500. My disbursement date was set for January 23rd.
I received a check in the first week of February that stated that my disbursement amount was only for $7275, and the check amount was $666.48. The document that the check came attached to stated, “If your financial aid includes a loan, you may cancel that loan by notifying the office of student financial aid in writing within 14 days of the loan disbursement date.” It goes on to say, “Complete withdrawal prior to completing 60% of the term will require financial aid repayment.”
I immediately went to the Financial Aid Department to discuss the terms written on the check document and the incorrect amounts. I spoke to the Director of Financial Aid, LadyB. She said that I should have received a paper in the mail stating how much money I would be receiving after tuition and fees were paid. At that point I could have rejected the loans by January 10th and would not have to pay anything. Because I never received such a paper, my rejecting the loans by January 10th was not a possibility.
I delayed withdrawing from school because LadyB then took it upon herself to try to find other loans that could be available to me so that I could stay enrolled in school and taking classes. Within about a week, she called to say that I did not qualify for most loans and that others were just not available. She then explained that the best she could do for me, because it was now past the 14 day cancellation period as written on my check document, was that as long as I withdrew from school by February 23rd, she would go ahead and send half of the money back to my lender so that I would only have to pay half. Reluctantly, I said okay and I withdrew by the allotted time.
In August I received a piece of mail from CollegeX stating that I owed them $3849. I figured this must have been a mistake because half of my tuition was sent back to my lender (BankX) and I had already set up terms for repayment with them. I called the Financial Aid Department and spoke with LadyA. I explained to her all of my circumstances and she explained to me that I should have received a paper, in the beginning, that said how much I would be receiving back after my tuition and fees were paid. At that time I could have withdrawn from classes by January 10th. Though I told her that I did not receive such a paper and that I had previously spoken with LadyB on this matter, LadyA insisted on my obligation to pay based on the policies of loan repayment. Upon my request, she transferred me to LadyB’s voicemail where I left my name, circumstances, and multiple phone numbers where I could be reached. I have never received a reply.
After months of phone calls with the Financial Aid Department, the Office of Administration and the Controller’s Office, I had still received little help and no reply from LadyB.
In January, a notice came from Collection AgencyX which stated that my debt was now within their office for collection; the amount now raised to $4811.25. I immediately called and was transferred to LadyC. She said that if I could not pay the entire amount right away, I would have to place one-third of the amount down ($1587.71) and pay $300 a month, consecutively, until the entire amount has been paid off. This amount is $962.25 more than the amount in question. I told LadyC that I was in the process of disputing this matter.
I then learned of the Office of the Ombudsman on CollegeX’s campus where there are people who stand up for student’s rights. I spoke with LadyD who agreed that my circumstances were complicated and that I should not have withdrawn from school at the time in which I was told to. She said that the best she could do for me was to put in a request to the Controller’s Office to recall the account from Collection AgencyX, and to remove the extra fees that had been added to the original amount I owed. I have yet to receive a reply.
I am writing to you because this is a problem that representatives of CollegeX have refused to address. Though LadyD of the Office of the Ombudsman has been very nice and supportive in this matter, I do not feel that she can bring this to further resolution. I find it appalling that I am being penalized for my reliance upon the apparently-mistaken guidance I was given by LadyB. I uprooted my life, left my family, friends, and a job to attend school based on errant financial information provided by CollegeX regarding leftover funds. When I discovered that CollegeX’s mistake created a situation where I could not afford to attend school, I withdrew according to the advice provided. It is absurd that I should be obligated to pay as a result of their consistently errant information. It is also offensive that they would send my file to a collection agency when they have repeatedly failed to respond to my messages and concerns. I am demanding that this debt be forgiven and that I am provided with documentation that shows I am free of obligation. This is the last result before legal representation. I trust that you will give this matter your immediate attention and I thank you for your time.”
The reason the student considers this a $9,000 letter is because she would have paid $7,500 for the semester, plus the near $1,000 extra tacked on by the collection agency and any applicable interest.
The resolution to this student’s story came in the form of a check. She was paid back every dime by both the college and the bank.
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