My Debt Blog

I have been waiting for a payment to my private student loan to post for a couple of days now. It usually shows up within a few days after I make the payment. Since my bank wasn’t showing it posted, I wanted to make sure it posted on the loan side to keep it current. When I checked out the payment history, it posted but I also noticed out of the last 6 payments I have made, my principle balance hasn’t gone down a penny. Why in the world would I just pay interest?

Soon after that I decided to call the private student loan company to find out what was going on. After being on hold for quite some time, I finally got to someone. They of course didn’t have an answer to my question, so I sat on hold even longer for them to figure it out. As it turns out the index my interest rate is based on skyrocketed this summer up to from 7% to 13% and has now dropped back down to 8.23%. They kept my payment the same, which means my payment has been back paying old interest while my account stays current. I told them I find it absolutely appalling that this wasn’t communicated or even give me the option to see what the unpaid interest was on my billing statement. All I see on the statement is the loans principle balance, rate, amount due, past due and late fees. I made my regular payment as I always have.

This company has got me so frustrated right now because they want me to keep making this same payment for another 213 months, or over 17 years. I started to look for another place to do a private student loan consolidation. Most of them require over $7500 while mine is only $6950. I finally found one that has a $5000 minimum, no fees, and a good rate of 3 month LIBOR plus 4.5%. My other concern was whether or not they were accepting new loans given the current state of the lending industry. They will accept new loans as long as I meet their requirements and can process my application within 24 hours. This means the old lender would get paid off within a week and I would have a new loan with a shorter term and better rate with the payment staying about the same as the existing loan.

I’m getting all the information together for this application along with a copy of my last billing statement from the existing loan company. When I get this in the mail it should arrive and process within a week. My wife has a bunch of private loans with this current lender too, but they are on economic hardship deferment until November. We might make an attempt to move her loans to this other lender as well later in the year. It may be psychological to pay off old loans with a new loan, but I think it creates a feeling that it is easier to move forward.

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