Loan Consolidation Embroiled In Dispute
The din just wouldn’d die down as banks, loan consolidators, and experts urged students to consolidate before the July 1 deadline. Students rushed in their thousands to consolidate their loans and lock in lower interest payments before the higher rates took effect. You would think that by now, the process having been completed, students would no longer be worried about their financial situation. Well, the fact is something else altogether.
Frustrated students and executives at some of the companies that process the applications are now accusing big lenders like Wells Fargo, Wachovia and even Sallie Mae of violating federal regulations and slowing the process, charging the higher rates in the meantime. According to loan consolidators, the banks have too many incentives to delay of which the interest rate plays a very important role. Congress raised the maximum interest rates that lenders may charge on student loans. As of July 1 the rate for students paying off Stafford loans rose from 5.30 percent to 7.14 percent, and nearly every lender charges the maximum. Nytimes.com reports:
Banks and other lenders say that if there are lags in processing applications, they are the result of the sheer number of students who have applied to consolidate their loans; one consolidation company received 40,000 applications in June alone. There is no central database that tracks the pace of consolidation activity.
Read more: Dispute on Loan Consolidation
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