Sallie Mae Agrees To Stop Pocketing Forbearance "Good Faith Deposit" & Actually Apply It To Student Loan Balances

Working off the peitition model that forced Bank of America to back off its $5 debit card fee, one woman’s crusade against Sallie Mae’s “good faith deposits” of $50 per loan in forbearance every three months has seen some success. The fee will still be applied, but now they actually deduct it from the total loans owned.

Last week, the New York Times says Stef G. collected 77,000 signatures and dropped them off at Sallie Mae’s offices in Washington, D.C., to ask that they stop collecting those fees, which cap out at $150 every three months, as students in forbearance can’t afford to pay them.

Loans not being paid are still accruing interest, even if the unemployed or otherwise down financially people aren’t paying those loans. And though those fees were called “good faith deposits,” the only place they were deposited was private lender Sallie Mae’s coffers. Now those fees will be deducted from the balance owed on the loans once regular payments are resumed.

Stef, who owed $40,000 in student loans that soon blossomed to $65,000 with interest, started the campaign, Tell Sallie Mae: Stop the Unemployment Penalty” with Change.org., after she couldn’t pay her nearly $600 a month in loan debt. She says it’s a move in the right direction, but that doesn’t mean she can pay the fee in any case.

“It’s a partial victory,” she said. “They’re still charging a forbearance fee, which they don’t for federal loans. I’m glad they’re not pocketing the fee, but they’re still charging it. And I still can’t pay it.”

Sallie Mae announced the change in their policy thusly:

“We have been giving careful consideration to our policy for some time, and we are changing it to apply the good-faith payment to the customers’ balance after they resume a track record of on-time payments.”

Online Campaign Prompts Sallie Mae to Change Policy for Loan Suspensions [New York Times]