Letter About 7-Cent Student Loan Bill Seems Like Efficient Use Of Government Resources

It was really thoughtful of the U.S. Department of Education’s Direct Loans program to let Puck know that his student loan payments, which he starts making in August, are too low to cover interest payments, and that some of that interest was about to be capitalized and become part of the loan’s total. It wasn’t all that thoughtful toward the environment or the program’s bottom line, though, because they printed and mailed a letter inviting him to use a forty-four cent stamp to pay off seven cents in accrued interest.

“They helpfully direct me to spend $.45 to send them a check and get it
all sorted out, though,” Puck wrote to Consumerist. “I’m having a hard time convincing myself not
to tape a nickel and two pennies to my response.”

Or he could just not do anything, but imagine the untold suffering and skyrocketing interest that would result if he left those seven cents to be capitalized.

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  1. Coles_Law says:

    To be fair, imagine you have autopay set up through your bank. Suppose this accrued interest was enough to bump the payment due up 1 cent (through rounding or whatever). Minus the notice, an uncorrected autopay would result in a late fee.

    • JohnDeere says:

      something similar happened to me with home depot. the bill i had been paying the same amount for almost a year, for some reason went up one cent. they didnt let me know until 2 months later and wouldnt take the 2 late fess off. i think it was $60 in late fees. i was under a no interest promotion for a year with approximately 2 months left and a work bonus coming up in one month to pay it off. to be fair they didnt add all the accrued interest that they could have but i went out the same day and got a loan from my credit union and payed it off and cancelled it. they lost a customer for life over one cent.

  2. cactus jack says:

    For just 7 cents a day you can help feed a starving politician in Washington…
    Or satisfy the interest accruing on your account.

    • matlock expressway says:

      “For just 7 cents a day you can help feed a starving politician in Washington…”

      Or pay their taxes.

  3. lyontaymer30 says:

    I would say make the smart financial decision instead of trying to prove a point. I’m sure that interest is gonna be higher than the .07 and the stamp together.

  4. Blueskylaw says:

    “Or he could just not do anything, but imagine the untold suffering and skyrocketing interest that would result if he left those seven cents to be capitalized”

    I wouldn’t sweep this thing under the rug. I would bet that if Puck lets this problem go for a year, that seven cents will turn into $1000 dollars after accrued interest, penalties, fees, administrative expenses, and any other bullsh*t charges they can think of.

  5. JJFIII says:

    Maybe Puck should pay the amount he should have to pay at least the interest. This seems like PUCK decided to pay a lower amount than is necessary to pay JUST THE INTEREST on his loan. If he continues to do that, he is adding 7 cents each time to his balance and the balance is never going away. Sounds to me like PUCK needs to evaluate his payment on his loans and pay MORE than just the interest each month. If he spent the time figuring this out instead of sending emails to websites he could get his financial mess in order.

  6. MaxH42 needs an edit button says:

    I believe the US Government pays less than bulk rate. The nonprofit bulk rate is as low as 8.7 cents per piece. More importantly, once you are not paying at least the interest accrued on your loan, the amount you owe will increase every month, IMO something worth a heads-up.

  7. Thyme for an edit button says:

    The Direct Loan Servicing Center is awesome. At the end of last year, they switched me and others from Income Based Repayment to Standard Repayment (more than doubling the payment due for me). I got a letter dated 12/27 saying I had 30 days to submit my income info or I would be switched to Standard Repayment, but they actually switched me on the date of the letter. I called on 01/15 to sort it out and in a delightful demonstration of Verizon-ish math was told that I had not submitted my income information in time. When I pointed out that per the letter, I had until 01/27, the rep insisted I had not submitted the info in time. I asked how long was a month from 12/27 and she refused to say. It was amazing. I was glad I recorded that conversation. Then I spoke to a supervisor who admitted it was their mistake (a computer problem) and they had no solution other than to put me on a non-capitalizing forbearance for two months until they could fix the problem. This effectively extended my repayment period for 2 months through no fault of my own. If I made payments in the time period, they told me they would not be qualifying payments toward loan forgiveness. They were “working” on a solution according the supervisor, but did not know what it was. (Alas, Consumerist had no interest in this story.)

    Two months later, guess what I got? A letter stating interest was going to capitalize. I went directly to the Student Loan Ombudsman’s Office, pointed out that I had a recording of the Direct Loan Servicing Center’s incompetence and promise that the interest would not capitalize after the forbearance period. I also said I wanted to know how the Direct Loan Servicing Center was going to fix the problem they had created that cost me 2 months of payments.

    They did fix the capitalizing interest problem, but I never got a resolution on the issue that my repayment period is now 2 months longer because of their screw up. Instead, my loan was sold to Fed Loan Servicing. So far no problems there, but I am annoyed the Direct Loan Servicing Center is off the hook.

    • Scrutinizer says:

      Years ago I got a letter from my loan company, can’t remember who, telling me I was behind on my loan. I called to find out how I had gotten behind and I was told that I should have paid $X but had only paid $Y. I asked if a payment was missed and was told no I had made all my payments. I asked if I mistakenly under paid at some point I was told that all my payments were for the correct amount. I was also told that I had no late fees or other cost that would put me behind and that the monthly payment as calculated by the bank was correct to satisfy the terms of the loan. in fact I was assured that I had complied with all terms of the loan but I was still behind. Just like talking to the Sirius Cybernetics Corporation it didn’t seem to bother the bank at all that I was both in complete compliance and behind at the same time.

      For those of you without a life who are still reading it turned out that they though the payment labeled February was for March and I just made my March payment 35 days early while forgetting my February payment.

      • Velvet Jones says:

        Same thing happened to me with my mortgage and my idiotic credit union. Got a call in May from a very angry woman from the CU collections department, wanting to know why my payments were late. Knowing that all my payment checks had been cashed and on time I asked her what they hell she was talking about. Turns out the that my February payment was made “too early”, even though I made the same day as every other month for the previous year. They cashed the check, but never credited my account. The next three months they treated as late. After yelling at several people for the next several days they finally agreed to fix my account, but still refused to admit that they screwed up.

  8. Bagels says:

    Is this Puck from the Real World ???

  9. dogmaticman says:

    I welcome our robo-government debt overlords and their lack of discretion.

  10. brandyk says:

    my husband received one of these helpful letters (for around 200 in capitalized interest). ok fine. the problem was that it also indicated his loans were under ICR, which is not true – they are are under IBR. after contacting direct loans (i think ACS manages it now), they notified us that the letter was sent by mistake. given the comments below, the bigger story is that the DLSC mismanages the IBR program to the extreme detriment of consumers and to taxpayers in general. they have a HUGE problem correcting/calculating payments for married taxpayers with a spouse who also has student loans. [and of course we get to deal with that nightmare twice a year]

  11. 180CS says:

    Who cares?

    These kids of letters are automatically printed out in batches by a computer program, and then placed in envelopes, stamped, and addressed, by a machine.

    If someone had coded in a threshold so that these letters weren’t triggered until a certain dollar amount of interest, we would have a whole big uproar about the government is nickel and diming us by not informing us about our accrued interest.

    Not only that, but I think it would violate a couple recent laws about informing the consumer of accrued interest. Interestingly, those laws don’t have a threshold, so these letters legally have to be sent anyway.

    Problem?

  12. goodfellow_puck says:

    Just to be clear about the situation: This is ICR. THEY determined the payment amount, and then sent a letter saying they made it too low. There is no penalty fee, other than the laughable capitalization of 7 cents.

  13. Thomas says:

    Back when I had too much time on my hands, if a bank I had a credit card with upset me in some way — I would overpay the account by $0.01, leaving the penny credit.

    I would get a good chuckle every month, when they would be forced to spend the time, resources and postage — to mail me a statement to show the .01 cent credit!