Sallie Mae Changes Private Student Loan Fee Policy Because of Online Petition
Student loan giant Sallie Mae announced Thursday that it was changing its policy of charging unemployed borrowers a recurring $50 fee to participate in the lender’s forbearance program for private student loans after an online petition against the fee started gathering steam.
The announcement comes three months after Bank of America backed down from plans to charge a $5 monthly debit card fee after an online petition against the fee collected 300,000 signers. Both campaigns were launched on Change.org, a group based in an Francisco.
Stef Gray, 23, a New Yorker with a master’s degree in geography and geographic information systems who owes $600 a month on four loans, started the petition after Sallie Mae began charging her $50 every three months for each loan that was in deferment. Sallie Mae called the fee, which was capped at $150, a “good faith deposit,” but the fee wasn’t credited to borrowers’ accounts and it wasn’t refunded.
Gray saw it as a predatory “unemployment penalty” fee, levied by the nation’s largest provider of private student loans on a generation of graduates who were buried under a mountain of student debt and without the jobs or income they needed to repay their loans. It was, in essence, a fee that Sallie Mae was charging borrowers for not having enough money. “Sallie Mae is preying on people like me and cashing in on the fact that we need more time to find work before we can repay our student loans,” the petition said.
Thursday morning, Gray and Molly Katchpole, 22, the nanny who started the Bank of America petition, shoed up at the Washington offices of Sallie Ma to hold a news conference and deliver the petition, which had received over 76,000 signatures. Thursday afternoon, Sallie Mae changed its “good faith deposit” fee policy — albeit ever so slightly.
“We have been giving careful consideration to our policy for some time, and we are changing it to apply the good-faith payment to the customers’ balance after they resume a track record of on-time payments,” Sallie Mae said in a statement (“Online Campaign Prompts Sallie Mae to Change Fee Policy for Loan Suspensions,” The New York Times, Feb. 2, 2012).
Campaign: Sallie Mae Fee Policy ‘Change’ Doesn’t Change Anything
However, the company hasn’t stopped charging the forbearance fee, which isn’t charged on federal student loans. “It’s a partial victory,” Gray said. “I’m glad they’re not pocketing the fee, but they’re still charging it. And I still can’t pay it.”
Gray couldn’t afford the $150 forbearance fee that Sallie Mae charged her for January. As a result, her loans became delinquent last week. By comparison with Sallie Mae, Gray said her experience with oft-maligned credit card companies has been pleasant. “With Sallie Mae harassing me with collection calls while they’re tacking on $1,100 in interest every three months, and refusing to work with me, it’s ridiculous to say, but it’s made me hold up credit card companies as kind to consumers,” Gray said.
Unlike federal student loans, private student loans offer few repayment options for struggling students. According to Lauren Asher, a founder of the Project on Student Debt, private student loan borrowers are at the mercy of their lenders.
“Student debt has sort of stalled my generation in a state of arrested development,” Gray said. “You can discharge gambling debt or child support obligations in bankruptcy, but not student debt, so I guess in the eyes of the law, it’s better to be a deadbeat dad than an unemployed graduate with loans.”
Gray is continuing her campaign to end Sallie Mae’s forbearance fee. The company’s policy change “does nothing to help borrowers like me who are in real financial trouble,” the updated petition said.
By Tuesday morning, Gray’s petition had collected over 115,000 signatures.
View the petition to Sallie Mae on Change.org
Student loan collection policies are as draconian as any that exist. There are assorted fees, charges, and whatever else they choose to call them, none of which in any other financial setting would be tolerated. Try this example: In 1993 My daughter had me co-sign a private loan so that she could live off campus. It was for $6,000. In 1996 I was run over by a drunk driver while on the job. I was a flight medic and my career ended that night. For the next 4 years I unerwent several operations and survived on workers compensation. Sallie Mae generously gave me a forbearance for the time I was in rehabilitation. In 1999, after losing everything I got a job working as a paralegal. I was then noticed that my payment for the $6,000. loan was then $17,000. due to all the forbearance fees and accumulated additional interest. The loan was in default. I attempted to write it off with the rest of the bills that went unpaid, but of course, it could not be written off. Fast forward, now at 61 years old I have rehabilitated the loan, but on the accounting I am now informed that by the time I pay it off, the amount will be $32,000. Unreal. What is fair about any of this?