Sallie Mae: Helping You Pay Less, So You Owe Them More

I think it’s underreported how incredibly nice the customer service agents at Sallie Mae can be about you not paying back your loan.

Like a lot of people, I took out loans for college, and after graduation, spent my early twenties not making enough money to pay down my debts.

Eventually I took a job at an internet-y, start-up-y, new media, digital-type company where I was nicely compensated, and I started making payments on my loans. I was laid off after 18 months.

When I called Sallie Mae to break the bad news, the customer service agent sighed and told me it was OK, pumpkin—I could put the loan into deferment.

I asked how long I could do that, and I don’t remember what she said, but she certainly didn’t seem to be sweating it, so I figured I wouldn’t either. Pay it back. Don’t pay it back. Pay a little on it. Defer it. Whatever.

I hung up the phone feeling like a fucking champion. I had faced a major financial fear, and it had been resolved thanks to a mutual agreement to not worry about it.

Two years passed, and the loan collected about $15,000 in interest. I got more full-time work and started paying my Sallie Mae bill again, but it looked kinda ugly, and I began to consider deferring it again. They’d let me do it so many times before. I once deferred paying back the loan for a year simply because it was the only way I could afford to deal with the amount of late-charges I’d racked up.

Go to the website, click a few buttons, watch the amount due that month fade to zero, and chuck those payment slips in the recycling bin.

Pondering that option, the other day I logged into and asked to reset my password—just how I do on the 26th of every month to pay the bill that is due on the 25th.

Right now I can pay a bill. And yet I cannot pay a bill. Paying a bill makes me upset. I get upset because seeing money that I have earned go toward something that will never go away feels futile. I looked at my outstanding balance and was struck by cold terror.

For about three months I’d been ignoring the $20 late charges and just paying the $247 due every month, thinking that the growing past-due balance would either disappear or get so big that it disappeared or… Obama? That $247, by the way, was only going to interest; it wasn’t even touching the principal.

So I called Sallie Mae to figure out what I’d done and what I could do. I started the call by telling the INCREDIBLY CHEERFUL agent that I’d been through periods when I couldn’t pay, but now I was ready to pay aggressively for however long it took to pay this thing down (hopefully not forever).

The agent told me I had set up a plan where I paid about as little as I could, but because of that, what I was paying was only going to interest, which was continuing to accrue. I could change the plan and pay more and some amount of it would go to the principal. This sounded good to me. This is what I wanted. I want to pay more, not less. But the agent kept bringing it back to paying less—so many times that it began to seem illogical to increase the monthly payment plan. I don’t think he was doing so for any other reason than he must get five billion calls every day from people who are like, oh my god, I cannot pay this bill. That’s gotta take a toll on a person.

In fairness, that’s been me for most of my relationship with Sallie Mae. But if a guy is telling you that you can lower your bill, and he seems really cool about it—shouldn’t you do that? Isn’t having a lower bill the point of life?

If I really dig in, maybe I can get the student loan bill lower than the cable bill.

It has taken me wa-a-a-ay too long to realize the difference between a loan payment and a cable bill. If you pay too much for your cable package you can cut back and get the plan that doesn’t include HBO, or you can cancel the whole thing. Don’t pay, and they cut your cable off. There’s no giant number that Time Warner has attached to your social security number that you need to pay down every month.

Loans, on the other hand, are a big number attached to your social security number, and you have to pay them back or the number gets bigger until you give them enough money to make it smaller. Buy some scratch-off tickets. Pack up your shit and disappear.

I’d figured this out with credit cards. Unlike Sallie Mae, credit card people are not very nice when you call them and ask for a lower monthly payment. Unless you can start throwing money at your credit card company in lump sums, you’re basically trapped in a cycle where your minimum payment goes only to interest forever and the amount you owe increases every month. They won’t help you. And so early on in my career as debtor, I paid off my credit cards.

But my experience with Salle Mae has been different. You can pay more to bring the debt down, but you could also pay less and bring the debt up, and they’re cool beans either way. You can also fill out a form and not pay it at all for a while.

Of course, I appreciate how nice the Sallie Mae customer service people have been to me.

I imagine they field a lot of rough calls.

I’ve definitely called them in rough times.

It’s just that there’s an institutional crack, a systemic fuck-up when no one—not even the people at Sallie Mae—acts like they expect these loans to be repaid. They’re just trying to figure out how to help you pay something toward your debt so you don’t get thrown out of a moving boxcar.

I am a person who has a lot of anxiety, embarrassment, and fear tied up in the debt that I owe. I will also admit to being kinda sorta clueless. So carrying all that baggage means that every few years when I experience a moment of clarity or something horrible happens to my ability to draw an income, I call up the owner of my student loan—and I get hosed.

You can’t get rid of student loans, not through bankruptcy or ever. If I’m allowed to grow a loan for YEARS after my education is complete, then who is the one making a living from my education? It’s not me.

Anyway, I visited the cold and logical after this latest call and figured out a way to not just make payments, but to start paying the thing off. My loan will probably be paid off in ten years. At that point I will have been out of school for 23 years, which is how old I was when I had to make my first payment to Sallie Mae.


Frank Smith lives in Brooklyn.


46 Comments / Post A Comment

PaprikaPants (#3,430)

“…then who is the one making a living from my education? It’s not me.”

Oh my god.

@PaprikaPants Yeah…kind of chilling to read it laid out in those terms.

AnaBanana (#3,447)

Great piece, Frank. Thanks for sharing your story with us. I think many readers can relate (I know that I can).

“It’s just that there’s an institutional crack, a systemic fuck-up when no one—not even the people at Sallie Mae—acts like they expect these loans to be repaid. They’re just trying to figure out how to help you pay something toward your debt so you don’t get thrown out of a moving boxcar.” <<–YES. And if they don’t expect you to, that affects your own mindset about your ability to pay them off.

sony_b (#225)

@Ladypants You know, I think that’s a feature, not a bug. They make a profit off of deferments. They are motivated as an institution to not take your money.

My question to Frank is – why are you asking to pay more? Why not just pay more? Sallie Mae took the option to “apply extra to principal” off the site a while back, which really pisses me off. But you can still send a check via billpay from your bank with extra money every month if you have to. Put a note in the memo field “to reduce principal” and they have to apply it that way if you’re up to date on your interest payments.

Wilgrims (#1,318)

It’s SORT OF no longer true that you can’t get rid of student loans. If they choose or switch to the new income-based repayment, most public service workers can have debt forgiven in 10 years. For everyone else, it’s 25 years. Admittedly, 25 years is so long that it basically only helps someone who never escapes poverty.

Heckyes (#1,162)

@Wilgrims BUT, while income-based repayment is great, it is (I think) only applicable to federal loans, not Sallie Mae, which is private. Also, at the end of that 10 or 25 years, the rest of your loan balance is taxed as income, so you have an enormous tax bill to look forward to. Student loans are the worst, always and forever, it seems.

Wilgrims (#1,318)

@Heckyes Right, duh! This Times article covers the “lucky” ones. But also says the public service people don’t owe tax?

Heckyes (#1,162)

@Wilgrims Good to know! I should really find myself a public service job.

ladydee (#2,825)

@Wilgrims I’d really like a lengthy Billfold article about the ins and outs of the public service 10 year forgiveness program. I literally signed up for it today but the thing is… I am so afraid after 10 years of paying my minimum income-based payments, I will be told the program is no longer legit or I did something wrong and HAHA, I was only paying interest for 10 years and my MASSIVE student loan is still waiting for me.

Heckyes (#1,162)

@ladydee I found this website sort of helpful:
I’m signed up for IBR too, but the 25-year plan instead of the 10-year plan and I also feel like it’s almost too good to be true? As good as paying 15% of one’s income for 25 years can be “good”, I guess.

ladydee (#2,825)

@Heckyes Yeah, I think I’ll feel a little more confident once 2017 hits and the first qualifiers for the 10 year plan have their loans forgiven.

Megano! (#124)

I am so so so incredibly lucky I did not have to take out loans.

ThatJenn (#916)

@Megano! Yeah, I’m incredibly thankful for that every day that I read the Billfold (which means… every day).

ghechr (#596)

This post is really sad on many levels.

SterlingCooper05 (#2,529)

This should be mandatory reading for all student loan debtors. Sallie Mae is not in business to serve their customers and it doesn’t matter how well they treat them. They get paid either way. Thanks for sharing!

I noticed this too. The joke’s actually on the taxpayer who will pick up what’s left of my gargantuan student loan bill once IBR runs out. Which I guess will be… me, in part? Ugh, just can’t win.

cmcm (#267)

Let’s all just move to, like, South America and just stop paying our loans back. Who’s with me?

eagerber (#1,958)

I feel for this author, but I can’t help thinking, like, yeah, duh, the longer the terms, the more you’re going to pay. For example, if you were to get a car loan or any kind of personal loan today, and you opted for a five year plan instead of say a one year one, your monthly payments will be tremendously smaller of course, but you’ll wind up paying so much more interest in the long run. It kinda seems like a no-brainer to me.

It’s also kind of unbelievable that Sallie Mae even allows people to go into deferment so many times — I was always under the impression you could only do that once, for a max of 12 months, and in “extreme situations” only (loss of job, etc). I mean, you wouldn’t be able to ask for deferment on a car loan (or can you? I don’t know!).

ETA: Also, how was he getting hit with “late-charges” if the loan was in deferment? Was it actually not in deferment then, and he just decided not to pay? I mean, if that’s the case, it’s not really the loan providers fault for the growing debt…

fsmith (#2,097)

@eagerber You make some really good points, and I’m glad you did.

I wrote the essay, by the way, and one of the things I was trying to get at, and maybe didn’t, was that I wasn’t thinking about how loans work at all when I was signed up for them at age 18.

And THEN once I did start wondering what I was doing, I was SMACKED IN THE HEAD with debt anxiety/shame/etc. So just getting to that point where I could log in and look at what I owed to Sallie Mae was hard because it had felt like something that could never be solved ever, and I kinda gave up dealing with it.

And also — yup! I was able to sign up for deferment on their website. Maybe mail in a form. I can’t remember. I did this during lean times when I had more pressing bills to deal with. I don’t know if it’s shared experience for many folks, but I found it SO EASY to defer these bills that it began to seem stupid to pay them at all. Until it didn’t, and I realized I had to deal with it, and I felt generally vomitous about the whole thing.

fsmith (#2,097)

@fsmith There were never late charges while it was in the hardship or unemployment deferment. But the interest continued to accrue. I found deferment to be a solution for those times when I couldn’t pay and was beginning to rack up late fees. It saved me from defaulting, basically.

And I’m not saying any of this was smart. I found it shocking how quick they were to let me set up a system of non-payment or to whittle my payment down to an interest-only payment or whatever would just let things float.

eagerber (#1,958)

@fsmith hey! and thanks for the reply.

And I also have student loans and feel anxious and full of shame whenever I log into Mint. And so you don’t think I’m completely pious or anything — I’m still in grad school, though, and haven’t been hit with any official bills yet, so who knows how I’ll approach student loans post-graduation.

That said, I guess I have a hard time treating student loans unlike any other loans I have — car loan (now paid off), loan to my mom (no interest!), and credit card debt (0% APR transfers, hallelujah). I mean, I guess in my mind I see it all the same: it’s debt, in one of its many forms! I keep a pretty extensive spreadsheet of what money comes in each month, what goes out, and whether my loans are increasing or decreasing — it just makes sense to me to at least make the monthly payments on my debts (because they’ll at least do SOMEthing to the bottom-line) and throw as much else to them as possible without going into more debt, if possible. Ignoring the bills, or negotiating with others (or myself) to pay less each month, will just hurt me in the long run.

And yeah, totally surprised Sallie Mae allows for repeat deferments. (Which could be a god-send when one truly needs it, of course!)

I really enjoyed reading this, and thanks again for the response!

fsmith (#2,097)

@eagerber @eagerber Sure! You asked some questions I was hoping someone would ask!

Another note on this stuff: When I was unemployed or underemployed, I deferred when I began to rack up late fees from not being able to pay, which then kept me from defaulting. But the late fees did not continue once in deferment.

The only time I considered defaulting when I was employed was recently and that was a reaction to my past history and how easy it had been to ignore the problem instead of deal with it. I hope other people can be smarter than I was about all this. You sound like you are! So that’s cool!

Part of my mental block was that I was thinking about these loans completely unlike how I thought about other debts. Paying off my credit card debt WAS REALLY HARD, but it helped that the credit card companies were such jerks that I had some fire behind it.

eagerber (#1,958)

@fsmith Yeah, it sounds like Sallie Mae kinda leads folks into thinking students loans are unlike other loans. But that’s also kinda their job, right? To sell us loans for an “unbeatable” education. I mean, a bank is going to try talking you into taking on more car or more house than you can afford, but you might stop yourself or have a spouse or parent stop yourself. But the bank itself will never stop you. So I mean, why would we expect Sallie Mae to say, hey, maybe not go study broad this year, ok? Or, hey, maybe you should consider applying for in-state residency, to save you some money, ok? I mean, they won’t! They’re a bank! They want you take out as much money as possible. And just like a credit card company, they’re going to make signing up ridiculously easy; mortgages & car loans, not so easy to come by.

I mean, student loans are sort of ingrained in our culture in this positive light, too, you know? Even my parents said to me, student loans are GOOD debt! And we’ve all heard that before. And you believe it when you’re first signing the dotted line, but now…. it’s just debt, good, bad, it doesn’t matter. Just a big ole pile of debt.

Compounding Sallie Mae’s efforts to lead us into thinking student loans are different from other loans are the facts that, now more than ever, jobs are scarce, tuition keeps rising, and savings interest rates are abysmally low. People DEMAND student loans. It’s a win-win market for Sallie Mae.

I really liked this piece, but I have a question: does Sallie Mae not let you pay extra on the loan? I mean, my only private loan is held directly by my undergrad institution and they’re not at all out to screw me, but if I want to increase the amount of principle I’m paying on any of my loans, I just make a bigger than minimum payment, and as long as the total amount I paid is larger than the accrued interest, it gets applied to the principle. What does Sallie Mae do if you just pay more than the minimum without talking to them first? Laugh at you and keep the money?

fsmith (#2,097)

@Lorelei@twitter Ah! If you want to pay extra, it’s not easy. You have to specifically mark that you are paying extra on EACH CHECK every month, or send an email every single time — or they will use your extra payment to pre-pay your next payment. Which they have done to me, and it is frustrating.

There is no way to automate the process, and you can’t do it online with a card. It’s bananas.

In my experience, the reps bang on about how you’re going to have to pay all of the interest that will accrue over the entire life of the 20-year loan, so there’s no real point in doing anything but stick to your 20-year repayment plan. which is also bananas.

eagerber (#1,958)

@Lorelei@twitter I can’t speak for the author, but I personally have had no trouble paying Sallie Mae extra slash “principle-only” payments. My loans aren’t in repayment yet, though.

sony_b (#225)

@eagerber Yes. Just send two checks. Do their automated minimum thing and then set up billpay with “apply to principal reduction” or something similar in the memo, and it will get applied correctly. I set mine to land two business days after my regular payment is processed so there’s no question about it accidentally getting applied to interest ahead of my regular payment on the same cycle.

selenana (#673)

@fsmith Wait really? I have been making extra payments to SM(online, I log in any month I feel I can afford an extra $100) and I haven’t noticed it going toward the next payment. Where is my money going???

sony_b (#225)

@selenana Yep. Check into your statements and see if your due date is moving. If it is, you’re paying ahead on your interest, not paying down your principal.

selenana (#673)

@sony_b Nope. I just logged in to make an extra payment and my payments are definitely being posted and (partially, at the same rate as my minimum payments) applied to my principle. Perhaps sometime in the deep dark past I or one of my parents filled out a form??

aardvark (#3,451)

@sony_b I’m with @selenana on this one. I always pay extra on my Sallie Mae loan, and the extra always goes toward principal. I usually make a large lump sum payment each month rather than multiple payments. That might make a difference?
(I’m constantly ahead by a month on my due date, but that has more to do with a long story involving a surprise automatic deferment and much confusion than paying extra.)

sony_b (#225)

@aardvark That’s so weird. I’m glad it’s working for you. Wish it was working for me. :( Sallie Mae bought my loans from citibank about a year ago and for a while they had a little checkbox that I could check if I wanted to apply extra to principal, and then that disappeared and it started advancing my due date instead, so I switched to the extra check system. I just looked it up and the checkbox hasn’t reappeared for me. Annoying.

selenana (#673)

@sony_b I wonder if it has anything to do with the type of loans? Mine were all Stafford, then consolidated under SM. And from about ten years ago.

Lycan (#3,455)

I definitely nodded along as I read this article, but after I let myself step out of my woe-is-me-too feedback loop I started to shake my head.

The thing is that (unless you have private loans which in most cases you probably attended a private school instead of a cheaper public one) nobody is making money off your federal student loans. The government turns around and uses that money to give loans to current college students. Given how long it takes most people to pay off their loans and the rapid rise in college tuition, the program probably doesn’t even break even.

You need to pit the shame and anxiety you’re feeling at the size of your loan with the shame and anxiety you might have felt all your life, if at 18 you realized that you couldn’t attend college AT ALL and your career horizons were severely limited because no one, other than the government and banks who receive a guarantee from the govt. would give a loan to an 18-year-old. Most people may not see it that way, but student loans are a welfare program–hence the lax attitude of the student loan servicers.

I say you should just say thank you to Uncle Sam for the fact that being unable to make your payments for a time doesn’t automatically set you up for a trip to credit report purgatory.

fsmith (#2,097)

@Lycan You are so right. (Guy the wrote the article here, btw.) Neither of my parents went to college and without loans I simply couldn’t have afforded to go to the state college I attended.

Also, without those loans and college, I don’t think I’d be here on this website responding to your very thoughtful comment.

Part of writing this article was to shake out of that anxiety and shame and get to the other side. It’s not something I planned to write. It just burst out once I started dealing with the problem of this loan debt.

I’m lucky, all around, in that respect to be able to deal with it.

Beck (#2,269)

I don’t qualify for the ten-year loan forgiveness so I’ve been trying to pay mine off as fast as possible. I felt I could afford more each month than my IBR plan required, but when I called the loan company to raise my monthly debit they tried to ARGUE ME OUT OF IT. Then kept screwing it up so that something seemingly so easy ended up taking several months to organize. And then had to be completely redone when I consolidated my loans less than a year later. You really have to be your own advocate.

hershmire (#695)

Your credit card company wants you to pay because you could [somewhat] easily wipe that debt away with bankruptcy. Sallie Mae doesn’t care how much you pay because you are forever indebted to them.

Solution: skip college, sell drugs.

In 1994 I took out a $12k loan with Sallie Mafia. While in schiil, my wife became very ill and I had to withdraw to work so she could have health insurance to cover a surgery. SallieMafia was more than happy to “help” me diring this dificult period. In 2001 I began making paymnet on my loan. It had ballooned to over $32k! I have been paying $300/month for the past ten years. My loan just hit the principle balance of $12k again. My wife is now dying of liver and pancreatic cancer brought on my a rare genetic disorder that I have now been informed my 14 yr old daughter has inherited as well. I regularly have to make choices between feeding my kid, purchasing medications or paying SallieMafia.

If I choose not to pay SallieMafia they will garnish my paycheck. If I lose my job and am unable to pay, SallieMafia will garnish my social security (yep they can do that). Filing for bankrupcy is pointless becuase SallieMafia is a federally protected loan sharking agency.. With all the hoopala about the cost of college and recent gradualtes, my generation of borrowers has been completely left out in the dark to be eated alive by SallieMafia. There is no consideration for folks in my position who have been paying on loans for a decade or moer who have been buried in SallieMafia’s interest scam. I have paid my load off twice already with allthe payments being applied to interest..Am I pissed? HEll yes! Is there anything the government has done to address this problem? No. Is ther anything I can do? No. Screwed.. Ill be in my late 50’s by the time I pay off this loan and gain my freedome from the grasps of SallieMafia’s indentured service program they call “lowered payment plan”. If I were to do it all over, I would have used my American Express card to pay my tuition and living expenses then written it off through bankruptcy. All the money I haev had to give to SallieMafia over the years could have gone into a trust for my daughter for college. I refuse to allow her to fall into the same trap I did and will make sure to the best of my abilities to make sure she never borrows from this organization. They do not care about students, the are a big business whose only intrest is in feeding off the needs of the middle and lower class to reap as much profit as possible.

hrh (#4,156)

I’m mostly saddened, but also a little bit relieved that I’m not the only one who has issues with Sallie Mae. I consolidated my loans, and they became the servicer. I set up automatic debit and made sure it went through as planned. I’d check back on their website every month to make sure my loan payment had been allocated. Oh and it was… but they had “mistakenly” set my income-contingent repayment plan at $0/month. Not the $400 or so I was supposed to pay. Needless to say I’m livid and now have additional interest to pay back that should not have been accruing. I didn’t even choose to take out my loans with them. I’m seeing if I can switch providers immediately!

joem789 (#4,360)

This is merely one story out of many stories of hardship that is created through organized marketing hype and outright lies from our government and corporate entities. A person can make a living without going to college. The fact is that college programs are nothing more than empty promises surrounded by rhetoric. They suck you in through the use of fear. And once you get close to the exit door, they kick you out it.

I entered community college in 2006 with high hopes. Going back to school in my 30s was a big deal. And like many others, I had to utilize grants and loans. I went in “stupid” like many others. Thinking that getting to the finish line would set me up for life. Not hardly. Thanks to Obama, I had no aid left to complete my last course to graduate. So I went on a payment plan I couldn’t afford. I basically bounced checks to “get in”. I completed the class. I graduated. It was my intention to transfer to graduate school the following semester. By doing so, I could utilize student loans once again. Not hardly. A past due balance existed. I offered for them to pay the past due bill off the top of my financial aid. They refused. They would rather threaten me with collections and fees. This comes from a college that supposedly follows a mission statement to better the future of the community. Turns out they are hypocrites. The door is wide open for a compromise. They chose otherwise. Such a small inconvenience for them. And they come out in the good. All the while helping a student succeed. But they chose to fret over a small bill. That college is Murray State University. And I certainly don’t recommend that anyone deal with these jerks. It has been nothing but one hell of an experience for me. Go somewhere else.

Geologyst (#5,254)

I feel like I could have written this myself. Though I would like to speak to some of these nicer customer service reps. When I was laid off after 18 months at a good job I was basically told “guess you’ll have to find a way to pay us”.
I’m struggling to lower my payments now based on my income, which has taken a large cut. I’ve already resigned myself to this taking the rest of my life. I just want to be able to eat and sleep at night knowing I can afford an oil change or a new pair of pants.
I’ve been locked in battle with SM for months now over incorrect past due notices (misapplied payments) and misleading letters stating one payment (manageable) and a statement listing another (unmanageable). I’ve been on the phone with SM at least once a week for the last 3 months.
“If I’m allowed to grow a loan for YEARS after my education is complete, then who is the one making a living from my education? It’s not me.”
This hit so close. Right now, my battles with Sallie Mae and my current financial situation have only served to make me regret going to school in the first place and to realize I was too poor to have gone at all.

I want to pay back my loans. I did borrow the money after all. I am not after some sort of loan forgiveness. I just want to be able to live while I do it.

kayteebee (#5,618)

Great article Frank. Paying back Student Loans is an absolute premeditated and unjust scam.
Per the Congressional Budget Office, the Federal Government projects to make a record $50-Billion Profit on Student Loans in 2013. Yes…that record breaking $50-Billion Profit is the Interest collected from Student Loans. Ugh…whose pockets in Washington did I line today?

aysemari (#6,069)
This is very important to anyone who has a co-signor who placed their trust in you. And after being told that all it takes is 12 consecutive payments and the co – signor will be reelased, I am still stringing mine on after 48 consecutive on time payments. All along I am being told everything is going great, the co-signor will be removed that is UNTIL the day I make that request and suddenly I am told my payments were not high enough. But not ONE soul mentioned this to me before, when I told them that my primary goal was to have my co-signor removed. 24 months and higher payments later, I was told I have to be a US ciitzen. Though they took it back when I pointed out their own rules and requirements to them that clearly state being a permanent resident is enough. Now they claim my credit which is in the high 700’s is not good enough. And I would like to stress on both time I talked to dozens of associates and managers (especially after the first disppointment) and no one sees an issue but when I made that request SUDDENLY EVERY assoicate tells me I have to be a US citizen as if they were trained to say that. At 12 month use this excuse, at 48 months use this one, it really, really felt like they were trained that way. And I am afraid they will use another excuse in another 12 months when I try again.

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