Does FedLoan handle your student loan servicing?
Are you happy with them?
Many people are furious with FedLoan right now! Some say they are the worst student loan servicer, and believe they should be hit with a class action lawsuit.
They are saying that their credit score was seriously damaged because of FedLoan’s careless practices. I have to say, that’s scary!
I don’t personally have any loans serviced through FedLoan, but I was recently contacted by a person named Mary, who had quite the story to tell.
How FedLoan Killed Mary’s Credit Score
Mary recently consolidated her student loans, and was setup with FedLoan for the servicing of her new loan.
That’s when Mary found out that they had set her monthly payment at an amount she could not afford to pay, without consulting her first.
It’s important to be able to afford to make your student loan payment!
So she called and asked about changing her payment plan.
That’s when her nightmare began:
During the next 6 months, she went round and round with numerous FedLoan customer service reps, even so called “managers” – just trying to change her payment plan to something she could actually afford.
First, they told her she had to wait 2 weeks to receive a letter from them. At that point, they said, she could change her payment plan.
According to Mary, they told her not to make any payments during that 2 week period of time, so she didn’t.
Needless to say, she never received the letter. So she kept calling, every 2 weeks, talking to different representatives, trying to get something done. All to no avail.
This went on for 6 months. During that 6 month period, she made no payments on the loan (per their instructions, she says).
Then she found out:
One day during one of her many calls to FedLoan customer service, she checked her credit score (because she was preparing to purchase a home at the time).
And there it was: Delinquent!
According to Mary, throughout that 6 month period of waiting for this “letter” to arrive and being told not to make any payments, FedLoan reported her account as Delinquent!
As you may know, having an account go delinquent for 6 months can all but ruin your credit score, and will remain on your credit report for 7 years.
MyFICO says such an event will likely have a severe negative impact on your credit score. Ouch!
Mary didn’t divulge how much of a drop it caused to her credit score, my guess would be that it probably dropped her score by around 100 points.
But this would really depend on what her starting score was, which she also didn’t mention. So it’s tough to say for sure.
Either way, I think it’s safe to say – FedLoan killed her credit score!
Did Mary Ever Get Her Payment Plan Changed?
As far as I know, she was still working on it. I hope to hear an update on that and if I do, I will post it here ASAP.
Did She Get Her Credit Report Fixed?
She says they refused to remove the derogatory items from her credit report, because they maintain that it wasn’t their fault.
So she’s stuck with a severe negative item on her credit report for the next 7 years because of this.
Could This Happen To You?
I’m not really one for spreading fear, but it is certainly a possibility that this could happen to you. If you think it’s a possibility, or if you are afraid this may happen in the future – then I recommend getting your 3 free credit scores and make sure you check over your reports as well.
Get Away From FedLoan
If you’re currently with FedLoan Servicing, and would like to get away from them and transfer your loan to another servicer, check out StudentLoanHero and see what your options are.
What’s Your Experience with FedLoan?
I’d love to hear your experience with FedLoan Servicing, good or bad. Let me know in the comments below how you like it.