John had the money on hand to pay off the rest of his student loans all at once. Lenders don’t seem to get a lot of customers approaching them to do this, since student loan debt generally has lower interest rates than consumer debt. At least we’re guessing that they don’t get very many customers looking to rid themselves of all student loan debt, because they weren’t able to handle the request all that well. At least not without generating a teeny, tiny overpayment.

I was in a position to pay off the remainder of my student loans in the past few weeks, totaling about $8,000 with Direct Loans, and about $4,400 with the Student Assistance Foundation. I inquired to both about their payoff procedures, and they both said that if I paid with a bank account through their website, for the full loan balance (accrued interest since my last payment plus my principal), that payment would serve as a payoff.

A few days apart, I made these final payments. They each took 2-3 days to post to the loan servicers’ website, and to my bank account. Hooray! No more student loans right? Unfortunately this was not the end of the story. When checking the two servicers’ websites, I noticed that I had an ~$1.50 balance with one, and ~$0.50 with the other. My take on this was, I did not owe this money, that I shouldn’t have to pay this remaining two dollars because it is interest that has accrued in the days between my payoff, and the posting of my payment (why it takes 2-3 days for electronic payments to post is still beyond me).

I called Direct Loans first because they were the first people I paid and because I still had a payment pending on their website for my normal monthly payment of $226, and I wanted to see how this remaining $1.50 would be handled. The person I spoke with from Direct Loans said I shouldn’t worry about it, that they write off amounts of less than $5.00, and that I was good to go, and I would receive a paid in full letter in about 90 days.

So, I am satisfied at this point that I am done, they will write off the remaining balance and I’ll be free and clear. Unfortunately, this wasn’t the case. Right on schedule, my full payment for $226 was withdrawn from my account, the ~$1.50 was paid and Direct Loans’ website indicated I was due a refund. So I called Direct Loans back, and they said that I would be refunded the full amount of my payment, but that it would take 4-6 weeks and it would be by paper check (I work away from home for months at a time, paper checks mailed to my PO Box are left to rot for months). They also informed me that if I wanted that paid in full letter, I would have to call back in 90 days and request it, that it was not sent automatically.

This conversation got me wondering about my other servicer, and the payment I had pending with them. So I called them, and they requested that I send them an e-mail to stop my automatic payments, before they also took out a full payment and hand to issue a refund.

This is all very irksome. It seems to me that with our currently level of technology, these servicers would be able to set up their payment systems to recognize when someone had made a full payment, and stop applying interest to your account, and then to also automatically stop payments. Given the amount of money I’ve paid in interest over the years, the least they could do is automatically send me a piece of paper that recognizes I don’t owe them any money anymore.

None of this is a big deal in the over all scheme of things, and their system is probably designed more for the person that makes all 120 [of] their loan payments, but it still bugs me they are going to be sitting on my money for a month, drawing interest, in an age when instantaneous financial transactions are the norm. It seems unfair and asymmetrical to me.

Thanks for listening to me vent.

Funny how banks and lenders can’t get money to flow in the opposite direction from usual without a long delay and a lot of aggravation.

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