March 30, 2007

Georgetown teaches financial basics

Posted in Private Loans, Saving for College, Stafford Loans, The Financial Aid Process at 12:08 PM by Joe From Boston


Here’s a great article for for young people still in school – parents will probably want to share this with them. You can read the entire Washington Post article online here.
Money’s On the Line During These Classes – Colleges Teach Financial Basics
By Susan Kinzie

Heather O’Brien graduates from Georgetown University this spring with an education in biology, in English, in history. She leaves with a newfound conviction that she should work in the ministry. And with about $63,000 in debt.

“When I got here,” she said, “finances were the last thing on my mind. I was on my own for the first time, in a new place. It was very exciting — and it seemed like college would last forever.”

Now, she’s taking one last set of classes. It’s a sort of Real World 101, a crash course in money: Georgetown is offering a series of financial literacy workshops for seniors, covering such topics as loan repayment and consolidation, spending, credit cards, taxes and benefits.

The professors and other financial experts leading the classes all say the same thing: If only I’d known this when I was your age.

“These are lessons best learned young,” said adjunct business professor Michael Ryan, “when there’s not a lot on the line.”

Now some schools are adding courses on financial basics. Beginning this academic year in Virginia, for example, public universities are required to offer some financial literacy training, said Barry Simmons, Virginia Tech’s director of scholarships and financial aid. The school designed an optional online class, covering budgeting, credit cards and other basics for freshmen. The University of Virginia has a pilot program, too.

Financial companies offer occasional courses on campus, and some have pitched in on the Georgetown classes. The added focus comes as scrutiny on universities’ relationships with lenders increases and as Congress moves to ease the burden on students

“We get the sense that students don’t really understand how money works,” said Greg Pasqua, a senior at Georgetown who heads the student-run credit union and helped organize the seminars. “People do things that aren’t very intelligent with their money. Overdraw accounts six times on $2 purchases, and get hit with six fees for buying bubble gum. Or get reported to Equifax because you didn’t pay your loan on time, and you’re like, ‘I’ll get it next time.’ ”

Ryan said, “It’s amazing what some students don’t know — that 30 to 40 percent of their proceeds will be taxed away . . . Even basic things like 401(k)s,” or whether they should put money into the pretax retirement savings accounts.

At two recent workshops at Georgetown, students interrupted to ask, “What is a 401(k), anyway?”

So professors and other experts sorted through the unfamiliar names and the jargon, explained the types of benefit choices they’ll be expected to make, how to figure out what their monthly loan payments and take-home pay will be, how to invest in their 20s.

It’s not difficult stuff. It’s just — who has time to think about credit scores and interest rates when there’s so much else going on?

Until a car loan or a lease is turned down because of a bad credit score, or late fees pile up.

When O’Brien was a high school senior in Texas, she was offered a full scholarship to another school. But she loved Georgetown; when she visited, someone told her that everyone there has been given many gifts and that they should think about how to give back.

So she didn’t pay too much attention to the details of the loans she was taking out. “When I was a freshman, I was like, ‘Loans, great! I don’t have to pay them back ’til I stop going to school — cool.’ ”

…”It wasn’t until senior year, when I had to pay my own rent and pay utilities, that I really understood what $60,000 was,” she said, referring to her tuition debt.

This year, too, she started setting rules for herself. “I eat lunch on campus once a week and pack my lunch the other days.” And she limits her online purchases to $20 a month. She opened a separate account for her rent money so she’s not tempted to dip into it.

The classes have already changed her mind-set, she said. She learned about interest rates and credit scores. “I have had a couple of late payments that dinged me. I just thought, ‘Oh, one day late, not a big deal.’ ” But in the class she learned that could cost major benefits. “If you go three years [paying] on time, you could have a 3 percent decrease in the interest rate — which is amazing.”

March 29, 2007

Everything You Need to Know!

Posted in Misc at 12:48 PM by kpops


So many students today just don’t have the knowledge required right now to make educated decisions on funding the cost of education. There is so much to know from Scholarships to Federal Aid, different types of loans from private loans to federal loans. It is near impossible to know everything especially with all the changes to legislations that occur so frequently.

We can certainly help to better educate the world with our informative Financial Aid Newsletter!

For a free online subsricption please email me and I will make sure to sign you up. Also, please do not hesitate to reach me via phone at 877-328-1565 Ext. 210 for additional information on Federal Student Loans.

For your free subscription email me at KPopsie@StudentLoanNetwork.com or contact me at 877-328-1565 Ext. 210.

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Loan Forgiveness

Posted in Misc at 12:24 PM by kpops


Federal Student Loans may be discharged/canceled under specific circumstances set forth by the Department of Education. As applies to the Stafford Loan, these circumstances include death, permanent disability, school closure, and teaching in a Low Income School. In the case of a Perkins Loan, these circumstances are if you work in certain professions such as Law Enforcement, Nursing or Child Care.

You will need to contact your lender directly in reference to Loan Forgiveness. If you are unsure who your lenders are, your school will have this information on file.

It is possible to have your student loan debt discharged (canceled) or reduced, but only under certain specific circumstances, including death or permanent and total disability; school closure; working as a teacher in a low-income school or in a teacher shortage subject area; or in the case of Perkins Loans, certain other professions (law enforcement, nursing, etc). Your loan cannot be discharged because you were not satisfied with the education that was offered, because you did not complete the program of study, or because you did not get a job after completing the program of study.

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Details on the lawsuit against the Dept. of Education

Posted in Consolidation, Student Loan News, The Financial Aid Process at 9:26 AM by Joe From Boston


Here’s an article you all should read from the Forest Lake Times regarding the lawsuit against the Dept. of Education that began last week:

Frustration fuels local woman’s role in lawsuit

Cliff Buchan
News Editor

Dr. Brenda Pfeiffer wonders how many former students are in the same boat as she is when it comes to student-loan payments.

For 10 years she has wondered, but now the owner of Pfeiffer Chiropractic in Wyoming is hoping a legal challenge against the U.S. Department of Education will shed light on a federal system that she says is not right.

Pfeiffer, 41, made national news last week when she became the lead plaintiff in a class action suit filed against the DOE in federal court in Washington, D.C. The suit accuses the DOE of illegally charging late fees and interest payments against loan holders even though loan payments were made on time.

Pfeiffer sparked the lawsuit after several years of trying to talk to DOE officials about her situation with little satisfaction.

Now, as the suit enters its first phase, Pfeiffer wonders how many former students may be in the dark and unaware of the DOE’s billing system.

Pfeiffer’s story

A native of South Dakota, Pfeiffer went back to college to earn her doctorate of chiropractic after teaching mathematics. By the time she earned her chiropractic degree in 1994, she was faced with a $90,000 debt load.

She financed her post-graduate degree through the DOE’s Direct Loan Program and received funds for her education from the income contingent repayment plan, or ICR, she said this week.

Three years after graduation, she did what many college students do — she consolidated several college loans to ease the repayment schedule. There began the trouble, but it took Pfeiffer several years to figure it out.

Under the loan payment plan, Pfeiffer’s monthly payment date was on the 21st. According to the suit, she made payments on time and sometimes early.

However, the DOE attached a penalty to Pfeiffer for not making a separate payment for the time between June 21 and June 30, even though her next payment was not due until July 21. In her case, that meant a penalty attached from June 21. And in fact, she said, the penalty was capitalized and added to the principal of the loan.

It was the ever-growing year-end balances that triggered Pfeiffer’s alarm.

“I started investigating it in 2002,” she said. “I didn’t discover it at first.”

But after hours of review, second reviews and mathematical calculations, she finally understood what was happening.

“This thing took me a while to pull out,” Pfeiffer said. “I spent a lot of hours trying to determine where that money was coming from.”

Over months and months, she wrote and called DOE officials to point out the problem and argue that she was being unfairly penalized by the system.

During the course of her talks with the DOE, Pfeiffer says she was told that it was a computer misstep and that it shouldn’t happen. But yet the problem continued.

After numerous conversations with the DOE, Pfeiffer said she was left with the frustration that the federal agency would take no action because “‘That’s the way the system is.’”

The frustration swelled, she said, because she had acted in good faith to point out the problem. “Why they wouldn’t change it, I don’t know,” she said.

When Pfeiffer finally sought legal help in 2005, she was convinced that the DOE was “going to do it again and again.”

Pfeiffer says in the suit that over the past five years more than $1000 was incorrectly billed to her. She will be required to pay interest on that sum over the life of the loan if the issue is not resolved, she says.

Pfeiffer says students should be able to place trust in federal loan programs, but when situations like this arise, the trust is breached.

The case

According to the suit, the DOE computer billing system may have caused more than 3 million student loan holders to be charged hundreds of millions of dollars more than they owed. The suit contends the DOE is breaking the law in doing so.

The suit contends that the complex billing system used by DOE has impacted students and former students with consolidated loans that total more than $72 billion.

Mara Thompson, an attorney with Sprenger & Lang, which has offices in Washington and Minneapolis, said Monday there has been no response yet from the DOE.

If the education department wants to litigate the issue, Thompson said it could take more than two years to resolve the case. “If that is the case it will take that long,” she said.

The suit calls on the DOE to end the billing practice and return the money it incorrectly billed to student loan holders.

March 27, 2007

Financial aid – is it affected by child support or 2nd homes?

Posted in FAFSA, Stafford Loans, The Financial Aid Process at 2:24 PM by Joe From Boston


Here’s an informative article from the OC Register about financial aid:
Child support must be declared when seeking financial aid

By Tom Bottorf

Q. I’m a single mom and my son will be a college freshman this fall at a private California university. The income I claimed on our FAFSA included child support, but this ended last month when he turned 18. The financial aid award we received was weak in university grant money and heavy in loans. Did I make a mistake by including the child support?

A. You were absolutely correct in declaring your son’s child support. Your EFC (Expected Family Contribution) is inflated because of the child support declaration.

I recommend initiating an appeal with the college. Call the financial aid office and arrange for a face-to-face meeting (if possible geographically). Ask in advance if there’s a special form required for an appeal. Prepare any relevant documentation to support your situation.

Your situation falls into the category of “special circumstances”, and while there’s never a guarantee in an appeal situation, many schools will rule favorably and adjust the financial award to your favor when circumstances such as yours are revealed to them.

Q. I read that real estate does not have to be included on the FAFSA form, but I attended a seminar where the speaker said otherwise. What are the rules for property?

A. Your primary residence should never be declared on the FAFSA form. However, the equity you have in additional properties – such as rental properties or vacation homes – must be declared.

By the way, the CSS/PROFILE form does require you to declare your home value and debt and the resulting equity is assessed in your EFC calculation.

Q. We’re trying to find the best education loans. Our daughter received a subsidized Stafford loan offer for her upcoming freshman year. Is this a good loan?

A. You should ALWAYS accept a subsidized Stafford loan.

Whenever a federal loan is “subsidized”, this means the government is paying the interest while the student is in school (at least half time) and for six months after graduation. Only then does the first payment become due, and there’s been not a penny of interest accrual up to that point. So consider this to be an interest-free loan for at least the next 4 1/2 years.

By the way, the Stafford loan provides up to $19,000 total for a four-year undergraduate college term and up to an additional $4,000 if another year (or more) is required.

‘Preferred’ lenders – what does that mean to you?

Posted in Parent PLUS Loans, Private Loans, Stafford Loans, The Financial Aid Process at 8:33 AM by Joe From Boston


Here’s an interesting article from the Baltimore Sun on preferred lenders, with steps you can take to protect youself and your children.

N.Y. probe casts doubt on ‘preferred’ college lenders

Eileen Ambrose — Personal Finance

Colleges soon will send out financial aid packages that will include billions of dollars in loans. Before borrowing, many parents and students will check the school’s “preferred lender” list.

But the office of New York Attorney General Andrew M. Cuomo is investigating how these lists are compiled and whether undisclosed financial arrangements are undermining what’s best for families.

Cuomo earlier this month released preliminary findings of an investigation into the $85 billion college-loan industry. And late last week, he announced his intention to sue a California loan provider over accusations of making illegal kickbacks to schools. The company says it plans to defend its business practices.

According to Cuomo, schools don’t disclose how they come up with the preferred lender list, so families are not aware of potential conflicts of interest. Some lenders, for instance, pay kickbacks based on how much business the schools steer to the lender, Cuomo said.

Lenders also have picked up the tab to send college aid officers to ritzy resorts or provided other freebies, he said. And families, he added, are sometimes misled to believe that they must choose a lender from the college’s preferred list.

Financial aid administrators agree that any abuse must be stopped, but they add such problems are rare. Schools develop “preferred lender” lists to help parents and students through the maze of borrowing, they say.

“The marketplace is saturated with options. … It’s hard to sort them all out,” said Ellen Frishberg, director of student financial services at the Johns Hopkins University. “We’ve done a scanning of the marketplace, who’s good at service and who gives good benefits. And now we’re getting in trouble for this.”

Hopkins is in the direct lending program, so students borrow directly from the federal government. The Baltimore university, though, compiled a list of lenders that offer the best rates and service for families seeking parent PLUS loans and private loans, Frishberg said. She said she hasn’t heard from Cuomo’s office.

Hopkins students borrow $50 million from the government each year, and lenders have noticed. Frishberg said lenders have dangled incentives for the school to drop out of direct lending or to put a lender on the preferred list. The university ignores the enticements, she said.

“We have ethics here,” Frishberg said.

Cuomo said he released the early findings so that schools can correct any problems before aid packages go out this spring. His office also published a brochure to help families understand the loan process. It’s available at http://www.oag.state.ny.us.

Apart from a house, a college education is the biggest purchase that most students and parents will make. Families owe it to themselves to know their rights and make sure they get the best deal.

“Remember not to forget your consumerism. Higher education is a business,” said Kalman A. Chany, author of Paying for College Without Going Broke. Listen to what the colleges say, but do your homework, too, he said.

If the school is in the government’s direct lending program, there’s no choice. Uncle Sam is your lender.

But if you’re attending a school outside the program, your options are numerous.

First, understand that a preferred lender list is only a guide.

“You are not obligated to borrow from a lender that’s on the preferred lender list,” said Mark Kantrowitz, publisher of FinAid, an online provider of student aid information.

Still, a college’s preferred list can be a good place to start your research. Look at all the lenders on the list because discounts and benefits can differ widely among them, Kantrowitz said.

Ask the school how it came up with its preferred list, advised Sarah J. Bauder, director of financial aid at the University of Maryland, College Park.

Selection criteria

The university chose its lenders for their technology, pricing and customer service, Bauder said. For example, lenders waive upfront origination and guarantor fees that can cost a student 2.5 percent of the amount borrowed, she said. The school also selected lenders that have been in the industry for at least 10 years and that keep their loans rather than selling them to another lender. That eliminates confusion and protects loan discounts from being lost, which can happen when loans are sold, she said. (The university adheres to state ethics rules that prohibit the kind of activities noted by Cuomo and hasn’t heard from the attorney general, Bauder said.)

Next, look at what lenders not on the school list offer.

Kantrowitz recommends creating a spreadsheet with the names of the lenders, the discounts and what it takes to earn those benefits. “Focus on the [benefits] you can’t lose and don’t require you to jump through hoops,” he said.

Upfront benefits are more valuable than those on the back end that borrowers might never see, experts agree.

Lenders, for instance, often promise a reduction in the loan’s interest rate after the borrower makes three or four years of on-time payments. Few borrowers can go that long without a tardy payment so most never get the discount.

Upfront discounts vary. Many lenders will lop a quarter-point or half-point off the interest rate upfront if borrowers repay with automatic withdrawals from a bank account.

The Missouri Higher Education Loan Authority, a loan servicer, reduces the rate by 2 percentage points for borrowers making automatic payments on PLUS and Stafford loans. You don’t have to be from Missouri or go to school there to qualify. For a list of lenders the nonprofit works with, go to http://www.mohela.com.

To check record

To check a lender’s service record, ask your college if it has heard of any complaints. Or, see how lenders treat you when you call. “Are they responsive? Do they answer the phone? How long are you on hold? Ask how many people actually achieve benefits,” Frishberg said.

Your first choice should be federal loans, which are always cheaper than private loans, Kantrowitz said. But if you are going to take out a private loan, check with your school first, he said. “Some schools negotiate with lenders to get a better rate for students,” he said.

And never borrow more than you really need, he said.

March 23, 2007

N.Y. Attorney General to sue C.A. student loan company

Posted in Student Loan News at 7:44 AM by Joe From Boston


Well, the ball has finally dropped in New York, and I’m not talking about the one in Times Square. New York Stat’es attorney general plans to sue Education Finance Partners, a San Francisco student loan company. Here’s an article from the Boston Globe detailing some of the issues between EFP and Massachusetts schools.

N.Y. official plans to sue student loan company

Firm gave funds to 6 Mass. schools

New York State’s attorney general yesterday said he plans to sue a student loan company for allegedly seeking to pay kickbacks to more than 60 schools, including Boston University and five other colleges in Massachusetts, in exchange for the schools recommending the lender to their students.

San Francisco-based Education Finance Partners also has payment arrangements with Emerson College, Berklee College of Music, Mount Holyoke College, Bridgewater State College, and Becker College, according to a spokesman for Attorney General Andrew M. Cuomo .

Cuomo, who has said it is a conflict of interest for schools to take payments from loan companies, gave the company five days to show why he should not file suit.

BU said in a statement that it received about $1,500 from the company over two years, and “we did not give preferential treatment as a result.”

The statement continued: “In fact, EFP asked us to sign an agreement to actively promote them, and we refused.”

BU, however, said it returned the $1,500 after inquires from Cuomo, and will not accept any additional funds from the company.

The student loan company issued a statement saying it would defend its business practices. The company said it s “revenue share” arrangements are often used to fund student financial aid, and do not impact the interest rates borrowers pay.

Several months ago, Cuomo launched a broad investigation into deceptive practices into the $85 billion loan industry, and he is investigating other loan companies.

Allegations that some colleges are more concerned about reaping financial benefits than getting the best loan terms for their students have been gaining political ground. Senator Edward M. Kennedy of Massachusetts and Senator Richard Durbin of Illinois, both Democrats, introduced a bill last month to require schools to disclose to students any special arrangements they have with lenders, and would ban lenders from offering gifts worth more than $10 to college employees.

According to Cuomo’s office, the company’s agreement with BU was to pay the university 0.25 percent of the value of loans BU students take out from the company between $1 million and $5 million.

For loans between $5 million and $10 million, BU would receive 0.5 percent, and for loans exceeding $10 million, BU would receive 0.75 percent.

Under that formula, BU would have received $3,750 for the $1.5 million in loans its students took out from the company . It is not clear why the payment, according to BU, was less than half of that. University officials declined to comment beyond the statement, saying they had not reviewed Cuomo’s letter.

When asked by the Globe about BU’s relationship with the company last month, officials said the payments were covering some of their administrative costs. They also stressed they do not have a “preferred lender” list and just provide a list of options to students.

Cuomo is focusing on schools taking the payments in exchange for putting that company on their preferred lender lists, which often include a few companies. But preferred lender lists are generally used by schools that participate in a particular government loan program in which BU does not participate.

BU students only borrow from private companies if they decide to borrow more than the amount included in their financial aid packages.

They borrow about $50 million from private lenders in a typical year, the school said.

An Emerson spokesman said the college stands by its financial aid practices, but he did not know whether Emerson had accepted payments from that company . Officials at several other Massachusetts colleges could not be reached last night.

Education Finance did not comment yesterday beyond its statement, but last month, chief executive and founder Tamera Briones said in an interview with the Globe that the payments were an effort to be a good corporate citizen.

“We are quite proud of the fact that we are giving back to the community so some families will have greater access to education,” she said.

March 22, 2007

Subsidized Loans Vs. Unsubsidized Loans

Posted in FAFSA, Graduate Students, Misc, Saving for College, Stafford Loans, The Financial Aid Process at 8:34 AM by kpops


As you now already now, Stafford Loans are Federal Aid awarded to students based on financial need. These are loans and not grants so they do need to be repayed to your lender, which of course means they accrue interest. What most students dont know is that there are two types of Stafford Loans, Unsubsidized Loans and Subsidized Loans. Subsidized Loans are awarded to the students with a greater financial need for the loan. The government pays interest on these loans while the student is in school. This means that the student does not begin accruing any interest on the loans until 6 months after graduation.

Unsubsidized Stafford Loans begin accruing interest from the date the loan is disbursed to the school. Although repayment of Stafford Loans is deferred until the student graduates from school you do still have an option of making interest only payments while in school. This arrangement can be made directly with your lender in order to save on interest paid over the long run. If you chose to defer your interest until you graduate the interest will be capitalized. This means that the interest will be added to the principal balance of the loan and you will then continue to accrue interest on the total balance.

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New EFC calculator from the Dept. of Education

Posted in FAFSA, Student Loan News at 7:55 AM by Joe From Boston


Wow, here’s a cool new tool available starting April 1st from the Department of Education.  FAFSA4caster will allow students to receive and estimated EFC (expected family contribution) – which is something we get questions about all the time!  I highly recommend you check this new tool out once it comes online.  The whole article is available through NAFSAA.  Information for accessing the tool is available at the bottom of this article:

Federal Student Aid is pleased to announce the release of FAFSA4caster, a new Federal Student Aid Web product designed to assist high school juniors and their families plan for education beyond high school. Beginning April 1, 2007, students can receive an estimated Expected Family Contribution (EFC) by entering their information into the FAFSA4caster tool, a customized version of the Free Application for Federal Student Aid (FAFSA). FAFSA4caster also provides guidance on next steps for applying for admission, applying for Federal student financial aid, and paying for education beyond high school.

FAFSA4caster Benefits

FAFSA4caster is a companion piece to the official FAFSA on the Web. The free FAFSA4caster tool will assist high school juniors and their families in the following ways:

  • Instantly calculate an estimated EFC
  • Inform the student of potential Federal Pell Grant (Pell Grant) eligibility
  • Reduce the time needed to complete the FAFSA when the student applies as a senior

FAFSA4caster Access

Students and families interested in assessing their eligibility for Federal student financial aid can access FAFSA4caster by visiting www.FederalStudentAid.ed.gov. The links for FAFSA4caster are located in the lower right corner of this page.

March 21, 2007

Government overcharges students?

Posted in Student Loan News at 2:17 PM by Joe From Boston


Here’s a rather shocking article for you from the Washington Post:

Lawsuit Says Education Dept. Overcharged on Student Loans

By Amit R. Paley

Washington Post Staff Writer
Tuesday, March 20, 2007; Page A09

The U.S. Department of Education has overcharged millions of Americans with student loans during the past decade despite repeated warnings that it was breaking the law, according to a lawsuit filed yesterday.

A computer glitch apparently caused more than 3 million student loan borrowers to be billed hundreds of millions of dollars more than they owed, said lawyers who brought the class-action suit. It’s unclear how much individuals were overcharged.

“That’s a large amount of money taken from students who trust that this program is run accurately and appropriately,” said Brenda K. Pfeiffer, a 41-year-old Minnesota chiropractor who discovered the problem and is the lead plaintiff.

The Education Department’s student loan programs have been buffeted by a series of controversies and have come under increased scrutiny by Congress. Lawmakers are investigating potential mismanagement and conflicts of interest. Legislation has been proposed to revamp the way the two major federal student loan programs are run.

“The Department of Education should look closely into the allegations made in the lawsuit, and Congress should continue to examine both student loan programs to ensure they’re working well for our students,” Sen. Edward M. Kennedy (D-Mass.), chairman of the Senate education committee, said in an e-mail statement.

Katherine McLane, a department spokeswoman, said agency officials would not comment on the issue because they have not been served with the suit.

The suit, filed in U.S. District Court in Washington, says a complex billing problem affected Americans with consolidated loans that totaled more than $72 billion. The suit says the department essentially imposed late fees on borrowers even though their payments were made on time.

Pfeiffer, a former high school math teacher, said the problem is so complex that it took her more than 1 1/2 years to figure out what was going on.

Pfeiffer graduated from chiropractic school in 1994 with more than $90,000 in debt. In 1997, she consolidated multiple loans under a plan that required her to make payments by the 21st of every month.

The Education Department penalizes consolidated loan borrowers who fail to make all of their annual payments by June 30 by adding penalties to the principal of their loans, on which they then have to pay extra interest.

Pfeiffer discovered that she was being fined unfairly, her lawsuit says. She made her June payments on time and sometimes early. But the department was penalizing her for not making a separate payment for the days between her June payment and June 30, the suit says, even though her next wasn’t due until July 21. The penalties were then capitalized — or added to the principal of her loan.

In 2002, for example, $368.76 was unfairly capitalized because of the accounting glitch, the suit says. Over the past five years, more than $1,000 was incorrectly charged to her. If the problem is not resolved, she will have to pay interest on that sum over the life of the loan.

Pfeiffer said she notified officials about the overbilling mistake at least 15 times over the phone and in writing. “Most of the time I was told that, yes, we realize that this isn’t right, but that’s the way the system is,” she said.

Her case, brought by Sprenger & Lang, a District-based law firm that has filed scores of class-action lawsuits, calls on the Education Department to end the practice and return the money it incorrectly billed to student loan borrowers.

Lawmakers of both parties criticized the Bush administration this month for allowing a student loan company to keep $278 million in improper subsidies. Democrats are also investigating whether loan companies have offered universities questionable perks to persuade them to direct students their way.

Pfeiffer said she is particularly angered by her experience because the department ignored her warnings.

She said, “There’s that level of frustration that after repeated attempts and not getting anywhere, you feel empty-handed and say, ‘What do you do next?'”

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