Forced to repay a student loan early -- so the lender can get its money back sooner?
That's what a local family thinks might be happening, after their son's lender made a bizarre request.
They brought their story to the attention of CBS6's Dori Marlin -- so Dori is getting to The Bottom Line, since it's something that could also happen to you.
Kevin Pittz of Delmar is going into his senior year at Nichols College, in Massachusetts.
He's a finance major, with a minor in economics. And right now, he's getting his own lesson in both.
"Well, when we got confirmation of the loan, the contract says 'repayment period grace period of six months after graduation,'" says Jerry Pittz, Kevin's father. He says Kevin was approved for his second loan with Chase Bank, for the coming year.
Their signed contract says Kevin's not supposed to start repayment until 2010, but just last week, Chase delivered a surprise: a letter in the mail, saying Kevin has to start repayment -- even though he's going into his last year.
"When I called Chase about that," says Jerry, "they said, 'well, he graduated.'"
"And you said?" asked Dori.
"I said, 'well, no he didn't, because you're giving him another loan!'" exclaimed Jerry.
He says Chase claimed, it was a problem with the school. So Jerry called Nichols College, talked to a couple staff members on the phone, and finally -- got an answer that astounded him.
"She said they're just getting bombarded with phone calls, because no matter who the lender is... Sallie Mae, Chase, whomever... everybody is getting these letters, telling them 'you're now going to be in repayment, even though you haven't graduated.'"
Their claim -- that the lenders are targeting students, for money.
"I've got to imagine that this is just infuriating as a parent, to see your son sort of led through the circles like this," said Dori.
"Absolutely," said Jerry, "because not only are you still paying for your college experience, now they're telling you to start paying early."
The situation is just as maddening, for student Kevin.
"Senior year, it's stressful enough," he said. "Now I have to deal with needing to repay the loan, before I'm even graduated."
Jerry wondered, if this is going on at a small school like Nichols, who's to say it isn't happening elsewhere?
So Dori called a couple local schools -- UAlbany and Siena College -- and both say, they have not run into this problem.
With Kevin's loan though, Chase had said it was a problem with the school... reporting Kevin had graduated, even though he hadn't.
The school had said, every month, they are reporting Kevin as still being in school... and they made the claim about the lenders.
So what's The Bottom Line here?
Dori talked to several sources on this one. First, both the Attorney General's office -- which the Pittz family did contact -- and American Student Assistance wanted to clarify, there are two types of student loans: privately funded loans, and federally funded loans, or Stafford loans.
Kevin's is a Stafford loan, meaning according to regulation, repayment should not start until six months after graduation -- unless the student takes a semester off, or drops below half the number of qualifying credits.
Kevin did neither.
Dori talked to Nichols College once more, to ask about the supposed trend; only this time, the staff members there backed off their stance, saying "it happens on a regular basis, but is not frequent" -- and they suspect it's due to "miscommunication" between the lenders, and the national clearinghouse where they report on each student.
Dori then contacted the lender -- Chase, in this case -- which insisted they are not targeting students for money, they have not gotten many calls about this type of matter, but that it does sound like simple "information miscommunication" that can easily be resolved.
Dori talked to the school's clearinghouse as well, and they basically said the same.
Late in the day, however, Dori got a call from someone else with Chase -- saying they discovered on documents from when the loan was first taken out, that Kevin wrote he was supposed to have graduated by now. That person said the clearinghouse had the same misinformation, they had talked to Kevin this afternoon, and now the whole issue was resolved.
Dori called Jerry Pittz once again, right after that phone call, and he said neither he -- nor Kevin -- had talked to anyone with Chase... since Monday.
Since this raises more questions than answers, Dori is going to stay on top of all parties involved. In the meantime, if something like this has happened to you, send Dori an email: news@cbs6albany.com .
