Avoiding Student Loan Default At Citibank: A Cautionary Tale

It’s an enormous relief to find someone at a large, powerful company who is kind, helpful, and able to solve your problems. Unfortunately, reader Flora learned that just because a person is kind and helpful, that doesn’t mean that you shouldn’t document your conversations with them in case things go horribly wrong.

I am writing with the hope that someone else might read my story and not make my mistake. I’ve had a lot of trouble paying my bills this year. I moved in with my parents in November to get things under control. One of the companies I owed money to was Citibank Student Loans. I finally contacted them in mid December to try to make things right so my loan would not go into default. The customer service rep could not have been friendlier. After I made a payment on the loan over the phone, she told me she had set me up on a payment plan, that as long as I continued to pay the same amount every month, my loan would not default. She wished me a Merry Christmas before I hung up the phone hugely relieved.

Last week, I called Citibank again to make another payment on my loan by the appointed date, as she had instructed. The very friendly customer service rep told me that my loan was in the process of being sent to collections, but that I could call Citibanks’ default department to make a payment. I called the number prepared to pay 300% of the payment I owed to keep this from happening, 800-XXX-9977. No one answered. The call went to voicemail. And the voicemail box of the number was full. I just tried it again, and it’s still full. [That's because the correct number is (800) 967-8877. -Ed.]

I called the main citibank number back, explaining that I wanted to make a payment. They just told me to keep calling the default office every hour or so until they emptied their voicemail box. After four hours, I finally left a voicemail which was returned the next afternoon while I was in a doctor’s appointment. I called again to leave a voicemail that night, being sure to keep my phone on me at all times so I could answer them. They called back the next afternoon. The customer service rep I talked to explained that my loan had been sent to collections in the 3 weeks since I had last talked to citibank, she claimed they had no record of any payment plan, and explained that they had the right to send my loan off to collections whenever they chose to. When I protested, asking if they had any recording or computer record of the conversation I had with the representative, and awe-struck that they completely ignored our deal, the customer service rep immediately changed her tone to shouting at me over the phone, explaining very brutally that it was all completely my fault for not paying. I waited long enough to hear the number of the collection agency to call before I hung up the phone literally in tears. I’m now trying to reach the collection company so I can start to clean up my credit score, bit by bit. I realize that I should have been paying more sooner, but that shouldn’t change the fact that they made an agreement with me, and then broke it immediately after, right? I don’t even know where my last payment went, if it’s in the citibank system or with the collection agency. All of my information has been removed from my online account. I was really trying to make this work.

I hope that anyone having difficulty making payments to citibank student loans records any and all conversations they have with customer service representatives. I was so naive, and trusted that such a large business would not completely lie to me. I hope that you let other people know not to make the same mistake.

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  1. Supes says:

    I have student loans with Citibank, and they’re a nightmare to work with even though I’m not going into default.

    The Citi Bank Student Loan online payment system inexplicably does not allow you to make online payments towards a specific loan (such as the loan with the highest interest rate). I mail in extra payments every month, and 80% of the time they do not apply it according to my instructions.

    Usually it takes several e-mails and a call or two to get it fixed, with extra interest piling up the whole time (and they tell me to “wait several days for the changes to show,” and then they pop up wrong, so the process can take weeks). It’s a nightmare.

    It’s like they’re encouraging the payments to be screwed up. Oh wait… they are! Because it’s more profitable that way.

    Student loans: the only industry where a defaulted loan is more profitable than one paid on time.

    • Nigerian prince looking for business partner says:

      “The Citi Bank Student Loan online payment system inexplicably does not allow you to make online payments towards a specific loan (such as the loan with the highest interest rate).”

      I’ve noticed that too and I don’t think there’s a work around. All of my loans are very low interest rate (prime + 0.5%), so it really isn’t the APR that I’m worried about. I have five loans and I owe various amounts below $1,500 on each. I’d much rather make minimum payments on four, and then dump money towards the fifth and get them paid off one at a time.

      I’m mostly worried that if a payment were to get screwed up, I’d get slammed with five derogatory tradelines that would have to be individually resolved. I’m assuming Citibank makes it intentionally difficult to pay off individual loans because it gives them a lot more leverage when people have financial problems.

      • Pax says:

        Make minimum payments on all five. Put the extra $$ in a sacings account. When you have enough, send in the total, ENTIRE balance of all five loans, all at once …?

        • Nigerian prince looking for business partner says:

          Any savings account would have a lower APR than the loan charges and it still means that I have all five accounts open while I’m accruing the money in the savings account.

    • mobiuschic42 says:

      “The Citi Bank Student Loan online payment system inexplicably does not allow you to make online payments towards a specific loan (such as the loan with the highest interest rate). “

      Sallie Mae does the same thing. I called and asked how to make a payment, and they said I could either mail it in or do it over the phone, in which case I would have to pay their $12 phone payment charge.

      I asked if there was a way to send a payment but continue making normal monthly payments – they often sneakily say, “ok, you’re paying $1000 now, so you won’t make payments for the next 10 months” rather than applying the $1000 and letting you continue to make payments. The phone rep said I could include instructions, and I did. But, guess what?
      That loan now says “Next payment, June 2014″ or something along those lines. So, I guess I’ll just have to mail payments on that loan every month. So frustrating!

      • Supes says:

        Yeah, you need to be very explicit in the instructions to “Not advance payment.”

        They still screw it up most of the time, and it’s a bitch getting it fixed.

      • common_sense84 says:

        Call and make them fix it. They will fix it, but this is kinda like where insurance companies pre-deny large claims knowing some people won’t fight it.

        I hate sallie mae for this exact thing. I am saving up right now to knock off the larger of the loans and I know it is going to be a bitch to get them to honor the instructions. You will just have to be persistent.

        You should file a BBB complaint, notify your congressman, and the state’s attorney general. They can’t just “accidentally” forget to honor your instructions while still cashing the check. It is either theft or fraud.

      • squirrel says:

        I do my payments through SallieMae, when online and making a large payment (usually 200% or more of the minimum payment) they always ask if I wanted to prepay or apply towards principal.

        My only beef with them was earlier when they changed something on their website so that a disclaimer or agreement was added that required one more clickthrough to actually process the payment. Nonetheless, this month should be the month my balance goes to zero.

    • bdj118 says:

      There is a way to apply payments online to specific loans, you just have to get the right person on the phone to set it up for you. My two highest rate loans have been moved to a separate “account” so the billing cycle is a day later than my other lower rate loans. Both “accounts” show up in my online account, and I can select which account I want to make a payment on.

  2. Holybalheadedchrist! says:

    It’s not for any nefarious reason, though. They are just bastards.

  3. GrantGannon says:

    Try consolidating with a direct loan from the government. https://studentloans.gov/myDirectLoan/index.action

    You might be able to get on an income-based repayment plan and lower your monthly payments.

    • Supes says:

      You can only consolidate once, and with the lender you took out the loans from.

      Capitalism and competition at its finest, right? And this was a provision created by the party of the free market….

      • Commenter24 says:

        That’s not accurate, at least not the second point. You can consolidate all of your federally-backed loans with a Direct Consolidation loan, regardless of who the current lender/servicer is. My consolidation loan literally closed 2 days ago, and I consolidated loans from 4 different lenders with the Direct Loans.

    • Commenter24 says:

      I’m guessing these are private loans that can’t be consolidated.

    • Nigerian prince looking for business partner says:

      If they’re through Citibank, I’m willing to bet that they’re private student loans with a variable APR that can’t be consolidated.

  4. obits3 says:

    One more reason why I have no sympathy for creditors…

  5. Bativac says:

    I work in a call center. I would highly encourage anyone calling a call center for something serious (not like a cable bill or something) to record your conversations. If nothing else, the threat to record the call will usually get you passed over to management.

    Your written notes aren’t going to do any good when the next rep has no record of the prior call (or says they have no record of it). If they’re the type, they will argue with you until they break you down. (It happens here on a daily basis. It becomes a personal thing. Sort of a power trip, I guess.)

    Recently, management has advised us we are no longer allowed to “go against” something a previous phone rep has said or reverse any of their decisions. I think it’s going to result in a court case at some point. I would urge anyone calling into these centers to prepare for it like you’re a lawyer preparing for a court case.

    • blogger X says:

      Good advice. Thanks!

    • Darkrose says:

      I, too, work in a call center and I can tell you that most of our reps will go “by the book” if you threaten to record the call. That means we can’t get away with some of the “extra” things we might usually do like give more credit than is due and so on.

      This is the thing I don’t get about people: Most people in call centers hate their jobs because they are taking an average of 45 calls a day and customers are rude, causing general hassles by throwing out they’ll record the call, or in general acting like a bunch of douches. In my line, we support very particular things, and if it falls outside the realm of support we DO provide, we are SUPPOSED to be hands off..but most of the reps here are pretty well versed in related issues and can often help..but not if the customer is going to treat them as if they are an adversary.

      • Nigerian prince looking for business partner says:

        Do we legally have to tell them we are going to record the call? It seems like most phone systems say something along the lines of “this call may be recorded…”, does that imply that they give consent?

        • jackbishop says:

          IANAL, but I understand recording by a participant in the conversation is legal under many circumstances anyways. If both parties are in the same two-party consent state (of which there are 11) is the only situation where recording without the consent of both participants is unambiguously illegal. If both parties are in the same one-party consent state, one of the participants recording is unambiguously legal. If the participants are in different states, things get somewhat less clear-cut: Federal law permits one-party consent per 18 USC sec. 2511(2)(d), but it is not clear to what extent this supersedes state laws for interstate calls, or how the laws of various states interact with each other. The 2006 California case Kearney v. Salomon Smith Barney Inc. asserts that Californians (California is a two-party consent state) are protected from surreptitious recordings even when the other participant is in a one-party consent state. It’s not entirely obvious to me that California isn’t overstepping its authority, though, and it’d be interesting to see a Federal ruling on this issue.

          I don’t think there’s any legal precedent regarding taking that ‘This call may be recorded’ boilerplate as permission.

          • common_sense84 says:

            Common sense says if they notify you they may be recording, you have permission to do the same.

            But the company you are fighting with has money and you do not. So they can pay and work to invalidate your evidence. Then get you arrested.

            Just use a speaker phone and have an open room mic going.

      • Bativac says:

        Well, we get rude callers, but you have to understand that these people are calling in because they have a problem, and by the time I speak to them I’m generally the 3rd or 4th person they’ve spoken with. So they are understandably upset.

        Part of the job is to calm that person down and handle their concerns. I am surrounded by coworkers who have this little bit of power over some customer and who enjoy exercising that power and engaging in arguments.

        Yeah, it sucks to talk to somebody who is being an ass, but that’s what we’re paid for. Chances are the jackass on the phone is a jackass who has paid the company a not-insignificant amount of money for some service that they (understandably in many cases) feel isn’t being delivered.

        • not-gonna-tell-ya says:

          I work in a help desk environment call center, and I disagree. My job isn’t to hold their wee wee to go potty. My job is to fix their problem. PERIOD.

    • AntiNorm says:

      “If nothing else, the threat to record the call will usually get you passed over to management.”

      No it won’t.

      /also used to work in a call center

      • Bativac says:

        Well, it does around here. Recording of the call gets into legal issues that front-line CSRs don’t deal with. If your call center doesn’t, then I say definitely record the call.

    • Charles Bronson says:

      “If nothing else, the threat to record the call will usually get you passed over to management.”

      In every call center where I’ve worked, you will be told that we cannot consent for the call to be recorded, and if you do not then confirm that the call is not being recorded, we must disconnect the call. No, it isn’t consistent considering we record our calls. To be fair, we truly only use the recordings for the purpose of training and improvement of our employees, not to protect ourselves against callers. We use written documentation for anything legal, and so should the customer.

  6. deezil says:

    Ask for any agreements in writing. With signatures. If it didn’t happen on paper, then it didn’t happen. If they won’t do paper, then just forget any deal you just made, or send it up the chain far enough that someone says they will send it out.

    • NewsMuncher says:

      So, if I ask for the agreement in writing with signatures, the representative will either decline or agree, telling me to wait standard shipping time (5 days-2 weeks?) for something to arrive. When a month goes by without the letter, do I then realize I’m in the same situation as the OP?

  7. micasaessucasa says:

    Citibank definitively has some issues with student loans.

    On two occasions when my husband took a few classes during the summer (and thus was considered a “full-time” student) we received some contradictory letters in the mail from citibank about his student loans.

    The SAME DAY we received two letters. The first letter stated that since my husband was a full-time student again his loan was deferred for x amount of time, great we will keep paying anyways. The second letter stated that his student loan was delinquent and that had to pay immediately, WTH. We have never been late or missed a payment. I called and they couldn’t tell me why I received the threatening payment past due letter. This happened has the last two summers. I think the second letter was just a computer glitch, but two years in a roll guys. Has anyone else received letters like this when their loans went into deferment?

  8. Jake 2600 says:

    I have A loan with Citi as well. If the due date lands on the weekend (which it does from time to time) I’ll submit the payment on the Thursday or Friday before (which is right when I get paid) Inevitably I’ll get bombarded with calls saying I haven’t paid and saying I’ll be going into default if I don’t cough up the cash. Apparently their system can only tell that you have paid or you haven’t. Not you’ve submitted a payment and Citi hasn’t pulled it from the bank yet.

    If you haven’t started college yet, DON’T get a loan from Citi Bank, they’re idiots and the interest rate is horrible

    • muffingal says:

      Citibank is the worst for student loans. First chance I got, I consolidated them because they were always quick to send you threats if you were one day late.

  9. Jennifer says:

    I had a similar experience with a Citibank student loan.

    I filed for bankruptcy, and of course my student loan wasn’t included, but Citibank stopped sending me notices and the online payment system showed no money owed.

    I called to ask what was happening, and a customer service told me that they weren’t going to collect payments while I was in bankruptcy, and my payments would start again when my bankruptcy was complete. I said “So I don’t owe any money right now?” and I was told No. I said “And you’ll send me a notice when my payments start again?” and I was told Yes.

    3 weeks later I got a call from a collection agency that they had bought my loan.

    In my opinion, Citibank is the only one who got screwed in this deal. I’m sure they sold the loan for much less than what they were owed. Meanwhile, I am paying the full amount back to the collection agency, as a matter of principle. And for some reason, it’s not showing up on my credit report as a default.

    • bd_ says:

      Just because your loan was sold doesn’t mean you were in default – they can choose to sell your loan at any time for any reason whatsoever, really. However they can (in theory) only ding your credit if you’re _really_ in default.

  10. HenryM says:

    I also have student loans with Citibank, and as much as I hate to say it, they have been nothing but a pleasure to work with. I’m just about paid off (June 2011), but they have been accommodating and fair throughout the process. I know, I can’t believe it either.

    • Big Mama Pain says:

      Thanks, I was just about to post the same thing. I have never had any problems with them. In fact, years ago, I moved; for some reason my bills were not forwarded and in my young stupidity, I let it go for about 6 months before I called them to figure out what was going on. They actually reversed reporting late payments on my credit report upon me paying 50% of what I owed over the phone. They were also really helpful in explaining the loan consolidation, explaining that it would be for only my federal loans, and also explaining how to assign my monthly payments more heavily toward their loans (which had the higher interest rate). I only had to do this one time, in writing. If I ever want to change it, I have to do it in writing. Pain in the ass, but at least you have a paper trail. So, honestly, I have not had any of the problems experienced by previous commenters.

  11. Juravial says:

    Ugh, citibank is the worst to have student loans at.

    My wife has a few Citibank loans, and if you are even a teensie bit late on the rediculously high payment amounts (think mortgage payment-esque for how high) they call you day and night.

    Also, Supes is completely right about not being able to pay down specific loan amounts (eg the ones with a higher interest rate). They won’t let you do that online, nor over the phone, or through the mail.

    Also, you can’t consolidate their loans if even one is private, as was the case when my (now) wife got fooled into getting one 1000 dollar private loan for her textbooks that they won’t let me pay off in full and prevents me from consolidating, even though the other $47,000 in loans are federal :/

    • Juravial says:

      Erm, I meant late from them deciding that your payment should be withdrawn from your account on the monday after rather than the moment you click on “submit payment” (usually on a thursday or friday for me as well, as its when I get paid).

      • dwtomek says:

        I absolutely love when banks do this. Do they seriously expect me to believe that the computers have to wait to do their job until someone gets in on Monday and hits some magical “back to work” button for the computers? I’m sure there is some explanation for this. I am also quite sure that whatever their explanation, the real reasoning is that they know very well that this practice results in them making more money.

    • Commenter24 says:

      You can’t really blame Citi over the high payments. High payments are the result of high balances; high balances are the result of borrowing lots of money.

      • jessjj347 says:

        I think the terrible part is not being able to choose which loan you are paying. This person can’t pay a $1000 loan because of other ones? Why is that?

    • Grungo says:

      “Also, Supes is completely right about not being able to pay down specific loan amounts (eg the ones with a higher interest rate). They won’t let you do that online, nor over the phone, or through the mail.”

      Wow, what a bunch of giant rear orifice sucknuggets. IANAL but I would not be surprised if this practice was actually outright illegal. Might be worth a half hour consult with a lawyer who does consumer law if you have $50k in debt. Knocking out an 8 or 10% loan first would save you a lot of money in the long run.

  12. common_sense84 says:

    Small claims court.

  13. The Christoph says:

    Oh Citibank, how I hate thee. Let me count the ways. The calls about being late were so obnoxious and literally happened ON THE DUE DATE, and before 8:00AM and after 9:00PM. So my wife and I, who both have our some of our educational debt with them, sent them an official cease and desist and reported them to the FTC. Apparently, Citibank has a robodialer that is not connected to your account at all. Sometimes, we’ve waited to talk to somebody on the opposite end and they have admitted that they have no clue why we’re being called. The business with not being able to process payments and “accidentally misapplying payments”(their words) caused us to reach our boiling point. So, we just banned them from calling us altogether. There is nothing they can say to me on the telephone that I really want or need to hear.

    I was kind of hoping that Citibank would have gone into receivership/closed its doors or something when they were in the hole. Too bad the US Government saved the pathetic bums. Perhaps it would have taught that organization some very critical lessons. Sigh.

  14. Double Trouble says:

    Citibank is a disaster.

    I have a mortgage modification with them. In that contract, it states that for the first five years of the loan, $1000 will be removed from principle if all payments are in on time. I called yesterday to ask when the first $1000 deduction would be made. I was told that nothing like that is in my contract. Keep in mind, that was after 45 minutes of being on hold, routed to and from loss mitigations three times, and being hung up on. Anyway, I implored the guy to review the terms closely. He came back and told me that the only incentive they are aware of is a gift card that they send out, and that I didn’t qualify. I said that was news to my – “My contract clearly states that you will reduce the principle by $1000.” He asked me to hold, and returned to tell me that my contract does, indeed, state that principle will be reduced by $1000, but that it only lasts for one year. I called back later, and another person told me that the contract clearly states that this is to happen for five years.

    Citibank is an absolute disaster at customer service, and they don’t care.

  15. SenorGrub says:

    I share your story. I could curl your toes with my stories of Citibank. I still love how in NY they had under the table agreements to monopolize student loans with schools. Their punishment for this, new students have to take classes on students loans. Our punishment (my school was one of them), Citibank, their people, ungodly debt and everything else associated with it. Mine went to collections and now I will have 30K of student loans paid off in 4 years (2 more to go) with an agreement with the collections group. Much better. F** Citibank and the blank check America has given them.

  16. powerrose says:

    I took a student loan out with Citibank and they entered my address in completely wrong (even though I wrote it down multiple times) and never attempted to contact my phone or email. They sold the loan (with the wrong info) to Sallie Mae. I move to Japan after graduating and tried to track down my loan as best I could. Sallie Mae also didn’t call or email, but I know they had my phone number when the collections agency (owned by Sallie Mae, cough cough) called me and I had the pleasure of paying $4,000 to “fix my problem”.
    In conclusion, seemingly most student loans agents suck and we have no power to keep them from screwing us royally.

  17. jedifarfy says:

    One thing that gets me about these companies: do they not realize that these are potential future customers? Yes, it sucks to have customers default. If they’re a problem, ban them. If they TRY and are working on working with you, why would you do your best to ruin the relationship you have with them? In 10 years, her credit will be clean and she’ll be doing much better. She’ll be ready for a house, car, whatever, and the companies that worked with her will get her business while the others will be banished from her mailbox.

    I’ve been lucky to have been able to pay at least the minimum on all my debts, but trust me: the companies that have tried to screw me over will never get my business again.

  18. thomwithanh says:

    Get EVERYTHING in writing