I’m 31 years old and have a good job as a lawyer in Manhattan. I’ve reached the point in my life where I can afford my monthly student loan payments, with a little help from my law school, and also afford to finance a tiny co-op somewhere in the outskirts of Brooklyn or Queens. So, I’ve made it, right?
Except I can’t borrow so much as a dime. I have terrible credit, despite the fact that I’ve never failed to pay a bill in my life. The only debt I’ve ever had is from law school. Like a good fiscally responsible adult, I’ve always paid those bills on time, always paying more than my monthly minimums to try and pay them off more quickly.
And yet, I am listed as being in default. If my landlord kicked me out tomorrow, I wouldn’t be able to rent a closet.
My previously stellar credit was destroyed by one of the many private contractors who service federally guaranteed student loans. I’m not the only person whose credit has been wrongly maligned by these contractors. Nor am I the only one who’s found the problem intractable. The Consumer Financial Protection Bureau, which oversees these servicers, reported in its 2012 annual report that “borrowers complain that there is a lag or lack of resolution to an inaccurate credit report” filed by servicers.
I would characterize this as an understatement.The most recent conversation I had with the loan company who destroyed my good name went something like this:
Rep: Yes, you are listed as delinquent.
Me: But you can see the records, right? You can see that I’ve always paid more than what is owed, and have never actually been late or short on a single payment, right?
Rep: Yeah, I see that.
Me: So, how am I delinquent?
Rep: You’re listed as delinquent.
Me: Well, I’m not delinquent.
Rep: I can see that.
Me: Can you fix it?
Rep: I can ask for an investigation, but the last investigation we did actually uncovered another delinquency, about a year and a half ago.
Me: But you can SEE on your computer screen RIGHT THERE that it never happened, I have never missed a payment.
Rep: Yeah, I can see that, it’s right here..
Me: So can you fix it?
Rep: I can ask for a new investigation, I guess. Sorry, I don’t know what to tell you.
And so the conversation went ,on and on, seemingly forever. I stayed calm and tried to appeal to her as a fellow human, though we both knew she had no control over the situation. When I was finished, I looked in the mirror to find that my face and neck were covered in bright red splotches. The rage was literally giving me hives.
Of course, having one’s credit ruined for no reason whatsoever is hardly the only way that loan servicers can destroy people’s faith in humanity. Previously, I had spent over a year fending off two different servicers, who were intently trying to collect on the same loans.
In mid-2012, upon the recommendation of the President and ubiquitous advertisements, I decided to consolidate my loans. There was a special deal, as part of the administration’s stimulus plan, which would allow me to lower my interest rate and reduce the number of different servicers I had to pay each month. All I had to do was fill out a form, and consolidate.
Consolidation requires essentially that one company fork over money to another company, at which point the second company releases your loans to the first. So Fed Loan Servicing wired money to ACS, at which point ACS should have handed over the loans. Except they didn’t. A “computer glitch,” apparently, caused the money to be automatically rejected. Fed Loan Servicing did not take the rejection well, and refused to acknowledge it.
I learned this only after I began to get two bills for the same loans.
At the time, naive as I was, I assumed that everything would get sorted in short order. After all, this was money I borrowed from the federal government. Presumably there are records somewhere of what money I’ve actually borrowed. It was clearly ludicrous to expect me to suddenly pay off an extra $40,000 in debt due to a mere technical glitch. Right? I even initially paid both servicers, to avoid the massive interest accruals that come with putting one’s loans into forbearance. I figured, once it was all worked out, any extra payments would be automatically credited towards my account, and I figured it couldn’t hurt to throw some extra money towards paying down my debts.
And so I began an odyssey into the heart of bureaucratic incompetence. After three months, having made no progress resolving the situation, I couldn’t afford to keep up the double payments. Both companies put their version of the loans in forbearance. Interest accrued. Countless phone calls and letters to both companies proved fruitless, each blamed the other. Threats to sue appeared to have no effect. I called the consolidation company — which turned out to be an entirely different private contractor — and yelled and cried and begged and pleaded to no avail.
Apparently, my problems were being shared by thousands of other borrowers who had been caught up in an overhaul of the Department of Education’s loan servicing system. The Chronicle of Higher Educationreported that people complained of having to place “multiple calls” to get mistakes fixed. That seems to accurately describe my situation, if you consider dozens of phone calls and letters to three different servicers over the course of a year to be “placing multiple calls.” I’d call it “summiting a mountain constructed entirely of metal spikes and impotent rage.”
The quality of customer service I received during this time varied. Some were sympathetic, but simply helpless. Others seemed to delight in trying to rip the still-beating heart from the chests of borrowers.
One rep screamed at me: You shouldn’t have borrowed money you can’t afford to pay back! This is YOUR fault! My brain exploded with an avalanche of horrible insulting comebacks. Instead I kept my tone civil (I can afford to pay my loans, as is clearly evidenced by my record of payments, however I cannot afford to pay twice what I owe). I figured, the only thing that could possibly have made me feel worse at that moment would have been to humiliate a stranger who probably makes minimum wage, if that.
So I managed to keep my calm-and-totally-in-control lawyer voice in the face of her venomous contempt, only to collapse in tears in my boss’s office afterward out of sheer frustration.
Another time, I asked to speak with someone’s supervisor. The rep responded with giddy schadenfreude that she would be more than happy to transfer me, but she could guarantee that the supervisor would never pick up the phone. I tried calling her bluff and told her I’d wait. As she predicted, no one ever picked up.
Eventually one of the reps took pity on me. She lowered her voice to a conspiratorial whisper, “this is happening a lot, and it never seems to get fixed. If you want to resolve this, you’re going to have to do something else.” “Like what?” I asked. “I can’t tell you,” she said, “I can’t say anything more. Just google it, search for ‘student loan help.’’”
I did, and found the Student Loan Ombudsman, a division of the Department of Education dedicated to fixing precisely this kind of debacle. Excellent, I thought, finally someone who can get through to these people. I called the Ombudsman’s office and was assigned a case manager who seemed smart, sympathetic and responsive. I begged him. You have to help me. Both loan companies were recording interest as accruing on that single loan. Now that I understood how incredibly incompetent these companies were, how could I possibly trust them, even if they did fix it, to not charge me twice for interest? And what about all those double payments I’d made in the past, would I ever get those back?
My case manager always called me back, though he too began to sound weary and defeated. “I’ve called them,” he’d say, “and they agree that it’s not right. They’re working on it.” It was the same line I’d been getting from everyone else, and he knew it. We didn’t seem to be getting anywhere.
Eventually, one year, and god knows how much interest later, everything was finally resolved. Or so it appeared.
The resolution itself was far from smooth. My loan bills seemed to contract and expand almost at random. At one point I was listed as owing on a loan with $0 in principal, but $6,987 in interest. At one point my account was debited twice — once for each loan individually, and then again for the same loans as a consolidated whole. But by August of 2013, everything seemed finally to be ok.
That is, until I was offered an airline credit card by a smiling stewardess promising me roughly a bajillion free miles. My husband and I travel enough that, honestly, I should have gotten a card with miles on it years ago, so I applied without even thinking about it. I’ve been paying bills since I was 17, and have never missed a payment. I pay off my credit cards in full, often on a weekly basis.
The letter from the credit card company stated that I was entitled to a free copy of the credit report that earned me my rejection. Looking it over, I once again cried tears of frustration. After all of this, a year and a half of struggle, when things finally seemed to be resolved, my credit was completely destroyed. Those tiny co-ops in the far-end of Brooklyn my husband and I had been mooning over? There was no way. I couldn’t borrow enough money to buy a birdhouse.
The credit report itself is almost hilariously inaccurate. I’m listed as owing far more than I was legally allowed to borrow to attend law school. Moreover, the supposed debt is listed as owing in only a single month — i.e. the supposed payment plan was “borrow tens of thousands of dollars today, then pay it all back tomorrow or you’re in default.” It’s the loan shark’s guide to financing law school. It’s also impossible, and thus clearly a mistake. Yet, while everyone agreed, it was clearly a mistake, it appeared to be one no one could fix.
To all those who assume that privatisation creates efficiency, despite a plethora of examples to the contrary, let this be a cautionary tale. Theseprivate contractors — these companies whose incompetence have inspired tragic tumblrs and incurred thousands of complaints to federal agencies– are making money hand over fist while being charged with managing over $1 trillion in student loan debt, most of which is public, federal loans. If anyone seriously wonders where the next financial bubble will pop, this is a good bet. It fits all the criteria: too many incentives to borrow money too easily; private companies charged with managing enormous amounts of federally guaranteed debt, and an industry that, as a whole, is certainly “too big to fail.”
People like me — successful young professionals — are supposed to be the heart and soul of a growing economy. We should be investing in businesses and the stock market, we should be making money that we can then spend, boosting our nation’s GDP, we should be saving for our retirement, and we should be having kids who can go on to be inventors and entrepreneurs. But that is simply not happening. Not only do many of us spend an outrageous percentage of our incomes on loans (and interest — of which I accumulate over $600/month, on my federal loans alone), but even those of us who pay are being held back from contributing meaningfully to the economy. Without good credit, I can’t invest in a house or a start a business. Even if I were to suddenly win the lottery, never before have I had so little faith in computerized money, suddenly seeing the wisdom in hoarding cash under a mattress.
Of course, having terrible credit and spending a year and a half battling student loan companies is hardly the worst student loan horror story out there. The internet is rife with stories about a system that is inherently unwilling to make exceptions, even where such exceptions are clearly warranted by law and morality. There are sad stories of people who defaulted due to rough times, and then were never able to get their credit back on track. There are endless stories of young people hoodwinked into taking out exorbitant loans to go to sub-par institutions that matriculate unemployable graduates.
But this is a different story.This is the story of someone who went to a good law school, is gainfully employed, can afford to make her payments, and does so each and every month. This is a story of someone who theoretically did everything right, and got screwed anyway. And I have no doubt I’m in good company.
I’ve reached out to the Ombudsman again, though my hopes are fading quickly. I’ve fought with the credit agency and the student loan company, I’ve sent letters and proof and talked to countless disembodied telephone voices. I’d consider suing, though I worry that an army of salaried in-house lawyers will have little incentive to quickly resolve these kinds of cases — especially since I suspect that the number of such suits is growing exponentially — which means it could be years of litigation before I could even think about applying for another credit card, let alone a mortgage.
In the meantime, I’m left continuing to make my payments while increasingly beginning to wonder what the point is. It’s not a fair game if I’m the only one playing by the rules.
Note: After this article was flatly rejected by everyone I sent it to, the situation actually got resolved, thanks to help from the Student Loan Ombudsman. If anyone there is reading this, the guy’s name is Jason, give him a raise. If anyone else is stuck in this same hamster wheel of rage, please reach out to the Ombudsman! Also, I feel your pain.
This post originally appeared at Stoned Crow Press, an amazing writer’s collective which I’m grateful to be a part of.