Your Questions About Direct Loan Servicing

Nagesh answers:

Whoa there.

First of all, why does your grandma want to make loan payments through Moneygram (which charges a fee) instead of through her bank (which is free)? Before you write any letters, I think it would be wise to investigate this further.

My parents (when they were still alive) where forever getting suckered into budget pays, EZ loans, and whatnot that charged them anywhere from 5%-38% in fees and interest. If you don’t feel comfortable discussing your Grandma’s loan payment situation with her, have your parents step in and help.

So getting back to your request, there are no sample letters for this kind of transaction. What your Grandma is wanting to do is cancel her existing direct debit plan with the bank since she intends to make future loan payments using a third party money service. Period. That’s all the letter needs to state.

Nagesh answers:

Your loan will go into repayment 6 months from the day that you cease to be enrolled at San Jose. If you enroll at a different school, you can apply for an in-school deferment as soon a you begin classes and you will not have to pay until you leave that school. The process is usually not automatic, though. If you don’t apply for it, you will be expected to make your payments even while you are in school

To apply for a deferment, contact the servicer of your loan. If you don’t know who that is, go to www.nslds. Com. This is the National Student Loan Data System, where all your student loan records are kept. You can access your account there by using your FAFSA pin number (If you don’t remember it, go to www.pin.ed.gov). Once you are into your account, you will be able to see all of th activity on your loan, and will be able to see who the servicer is and how to contact them. (Note: The lender of Direct loans is the federal government, but customer service on them is farmed out to private companies such a Sallie Mae or Great Lakes, so even though you don’t actually have a loan with, say, Sallie Mae, that’s who you need to contact for customer service).

Nagesh answers:

The decision to take student loans out of the private arena was due largely to abuse by a handful of some of the largest companies. Meanwhile thousands of companies across the nation were doing business with integrity.

The public was asking how the health care was going to be paid for and so student loans was the answer. But if the payments people are making on their student loans are going towards health care, what is paying back the debt that the government borrowed to disburse the loans in the first place? This will only add to the national debt and in a big way.

Yes, the government taking over student loans is going to make more jobs–in the government. However, hundreds of thousands of jobs across the nation are in jeopardy because their business was just forcibly ended.

In addition, consider the customer service people are and will be receiving. Currently, Direct Loans is the only company doing federal student loan consolidation. They are so backed up that applications they received in December aren’t complete yet, even though they have had all the information to do so since January. If they are this backed up already, how are they supposed to handle all the new student loans?

On a positive note, I believe that most of the problems with getting the loan money to the schools and/or students will likely be ironed out by the time you get to college.

Nagesh answers:

Topic 203 – Refund Offsets: For Unpaid Child Support, And Certain Federal, State, and Unemployment Compensation Debts
The Department of Treasury’s Financial Management Service (FMS), which issues IRS tax refunds, has been authorized by Congress to conduct the Treasury Offset Program. Through this program, your refund or overpayment may be reduced by FMS and offset to pay:
•Past-due child support
•Federal agency non-tax debts
•State income tax obligations, or
•Certain unemployment compensation debts owed a state. (Generally these are debts for compensation that was paid due to fraud or for contributions due to a state fund that were not paid due to fraud)
You can contact the agency with which you have a debt, to determine if your debt was submitted for a tax refund offset. You may call FMS at the number below for an agency address and phone number. If your debt was submitted for offset, FMS will take as much of your refund as is needed to pay off the debt and send it to the agency you owe. Any portion of your refund remaining after offset will be issued in a check to you or direct deposited for you.
FMS will send you a notice if an offset occurs. The notice will reflect the original refund amount, your offset amount, the agency receiving the payment, and the address and telephone number of the agency. FMS will notify the IRS of the amount taken from your refund. Contact the agency shown on the notice if you believe you do not owe the debt or you are disputing the amount taken from your refund. If a notice is not received contact FMS at 800-304-3107 or TDD 866-297-0517. The available hours are Monday through Friday 7:30AM to 5:00PM CT. Contact the IRS only if your original refund amount shown on the FMS offset notice differs from the refund amount shown on your tax return.

Http://www.irs.gov/taxtopics/tc203.html

Hope that you find the above enclosed information useful. 01/06/2013

Nagesh answers:

Seller’s agents like to see a buyer use a lender that they are very familiar with and has a reputation of being able to close tough loans in a timely manner. The problem with most big banks the loan is processed in some other state by a staff that doesn’t offer very good service. They don’t care if the loan takes 30 days or 90 days. That is why banks like BofA, Chase, and Wells Fargo generally give crappy service.

That is why it is smart to use a local “direct lender” where the loan agent, loan officer/processor, and underwriter work for the same company are in the same location and can freely and easily communicate with each other to get the loan closed.

Many seller’s agent will require a buyer is use a small group of local loan agents because they have a reputation of good service and if they say they can do the loan, they do. Many mortgage broker promise they can do a loan and can’t get the job done. They know going in the buyer’s chances of ever getting approved for a loan is no better than 50/50 but will lie to be seller and the seller’s agent on the hope of a outside chance they will find a lender that will buy the loan of a marginal buyer.

Mortgage brokers do not make loans…….all they do is put your loan package together then shop it around to various lenders. Mortgage brokers have little or no control with some underwriter that works for an entirely different company. When loan brokers give you a quote they are only guessing of what the terms and loan costs will be because again they can’t control what the real lender will charge at closing.