Daily Aid 105: Yet another reason to oppose all-Direct Lending

31 March 2009 8 views No Comment

Daily Aid 105: Yet another reason to oppose all-Direct Lending

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Ranting and Raving

A little QQ, or complaining vocally, about a student loan servicing company, ACS, from me.

Dear ACS:

STOP LOSING MY PAYMENTS.

For the last 3 months, you’ve lost every payment I’ve sent to you, and what’s more, your customer service team’s ability to deal with it in a courteous, polite manner has been inexcusable. They’re not even paper checks – they’re EFTs from my credit union. Would you [a] please fix the problem and [b] improve your customer service rep’s politeness? Thanks.

–

A little bit of background: when I joined the Student Loan Network back in 2003, I had about $25,000 in graduate Stafford loans thanks to Boston University’s MS/MIS program, which I graduated from in 1999. After learning about the wonders of student loan consolidation by working here, I consolidated my student loans in 2004. After multiple changes of guarantors, servicers, and other entities, my consolidated student loan ended up with ACS for servicing, which means that all the paperwork – bill payments, billing, notices, etc. – is handled through them.

Things were mostly fine up until about 3 months ago, when we noticed that things were getting wonky. I started getting late payment notices from them on monthly payments that were made on time or early, and each time contested the late payment with the appropriate information. This is now month #4 of their mishandling my account.

What’s behind this, you wonder? Simple: direct lending, or federal student loans through the US Department of Education, is managed through ACS. The Department of Education doesn’t have the capacity to manage all of the direct loan program internally, so servicing is contracted out to ACS.

I suspect that the 20% increase in direct lending schools – colleges that choose the direct lending program as opposed to the FFEL program (of which the Student Loan Network is a participant) – due to the economy and financial crisis has stretched ACS’ processing capacity beyond its service limits. That many new schools and new customers are probably bogging down their systems. I can understand that – during the peak of consolidation in 2005, there were days when I didn’t finish up work until nearly midnight, only to wake up at 5 AM and start all over again.

What does this mean for you? If you already have ACS as a servicer on any of your current student loan bills, make sure you aren’t getting shortchanged. I’d also ask you to contact your elected representatives and urge them NOT to vote for the elimination of the FFEL student loan program since a 20% increase in business is already enough to screw up service at the Department of Education’s contractor – I can only imagine what service will be like with a 400% increase.

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