Tuesday, March 20, 2007

Consolidation Borrowers Overcharged

Thanks to the commenter who pointed this out. According to a lawsuit filed today, a very stupid error in the regulations has caused 3 million holders of Department of Education consolidation loans to be overcharged by capitalization of interest, to the tune of hundreds of millions. The most frustrating part is the lack of communication and accountability in the system, says the lead plaintiff:

"Pfeiffer said she notified officials about the overbilling mistake at least 15 times over the phone and in writing. "Most of the time I was told that, yes, we realize that this isn't right, but that's the way the system is," she said."


Anonymous said...

And these are the folks who want to run the entire student loan program? Interesting that no one seems to mention that this bungling which costs borrowers untold millions of dollars was done by the DIRECT LENDING program. Now I see why folks like it so much!

Anya said...

No way around it, this is a black eye for direct lending. The outcome of the lawsuit will hopefully help all student borrowers.

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