This month, I’m wrapping up two cases that involved major federal student loan consolidation errors by the U.S. Dept. of Education and an assortment of student loan guaranty agencies, servicers, and debt collectors. These errors were massive, complex, and entirely not the borrower’s fault. They also took months of effort and coordination to resolve. I am ecstatic that we obtained good outcomes for my clients and got the errors fixed, but unfortunately these problems are not exactly uncommon. It really shouldn’t be this difficult for student loan borrowers, but sometimes, it is.
If you’re thinking about consolidating your federal student loans through the federal Direct consolidation program, there are potentially many benefits: streamlined repayment (one combined loan, one servicer, one monthly bill); simplified interest (if you are converting variable-rate loans to the fixed, weighted-average interest rate provided by the Direct consolidation program); default resolution if you are including defaulted federal student loans in the consolidation; and conversion to the Direct loan program through which you can access some additional student loan forgiveness and repayment programs.
But when things go wrong – especially due to mistakes outside of your control – it can be a mess to untangle. Here are some things to watch out for.Read More