Incessant credit card offers are one thing, but this is a whole other ballgame.
February 18, 2012 3:07 PM   Subscribe

Normally, an unexpected $10,000 check in the mail would be super. Not f it comes from a secret surprise student loan. Help me fix this please!

Short summary: I found out that I have $20,000 in federal student loans I didn't ask for, want, or know about. I have only received $10,000 of it. My school account says the first $10,000 of it was sent to me in October, but I never received it. What do I do?

Long version:

I'm in a one-year M.Ed. program, and took out a $5,550 federal student loan in 6/2011. It was credited to my student account at my school, and I received the resulting refund check. Great.

Fast forward to February, when I get a nice little $10,000 check in the mail from my school. I decide it's probably not just good karma, so I log into my student account (which I obviously should do more often), and find out to my considerable surprise, that since September, an extra $20,000 of student loans have been disbursed to my student account!!!?!?!?! There was a long period of taking deep breaths to regain equilibrium.

I checked my Sallie Mae account (they're servicing my Dept. of Ed. loans), and indeed, I have, instead of the expected $5,550 of loans, $26,000 of student loans!

I also checked the Dept. of Ed. "National Student Loan Data System", and it confirms the loans. More than half of the $20,000 is unsubsidized, too, which means $137 of interest has already appeared on the account :( :( :(. I called Sallie Mae, and they informed me that they don't create the loans, just service them, and my beef is with the school bursar's office.

There are two questions I plan to ask the bursar's office (which I will call on Tuesday when they reopen) about this situation:

1. How the HECK did $20,000 of student loans get taken out in my name without me knowing about it or signing anything?!


I have no memory of receiving such a check, I certainly didn't deposit it, and to be sure I have combed my bank account, and no such check has been deposited. The $10,000 check which I did just receive is in my lockbox, awaiting a resolution to this situation.

My questions for you kind mefites are these:

1. What do you think happened? Have I been defrauded? A simple error? I did sign a master promissory note in June for the first loan that I actually wanted, but I can't imagine that would allow someone to take out loans for me without my explicit approval, right? Does this kind of mistake happen frequently?

2. Given that my goals are:
- make the $20,000 loan disappear
- locate the missing $10,000
- give back all the money
- avoid paying any interest on unwanted loans
- avoid damage to my credit score
what is my best strategy? Who should I call, what should I ask? Do I need a lawyer? At the moment, my only plan is to call up the bursar's office on Tuesday, ask them what happened, and hope they can fix it for me, but if they are less than helpful, I have no idea what to do.

3. What did I do wrong? Is there something I could have done or can do for the future to avoid this?

I am pretty unfamiliar with loans in general, and totally bewildered by this turn of events, and I'd really really like to wrap this up quickly and neatly, with a minimum of "Dude where's my car"-esque antics.
posted by Salvor Hardin to Work & Money (15 answers total) 4 users marked this as a favorite
You need to go in to your school's financial aid office and talk to one of the people there. They can answer a lot (if not all) of these questions.
posted by magnetsphere at 3:13 PM on February 18, 2012 [1 favorite]

This sounds like it could be a case of student loan fraud ... I would contact the lender directly and perhaps the government student loan authorities. Seriously.
posted by jayder at 3:22 PM on February 18, 2012 [9 favorites]

Best answer: When you take out a loan, you have to specify the loan amount or they will assume you want all of it. I think this is the full possible amount of the loan being credited back to you as if you'd asked for all of it in the first place. Double check the paperwork you have that specifies the loan amounts. Track down the trail of the previous disbursement and that may help you find out where it is.

The above posters are correct in that you should talk to the financial aid people and to the lender who actually made the loan.

Also, the student loan school year runs from July to June or something like that. Was the first loan you took in the 2010-2011 year? (When did your classes begin?) The dates of these loans are from the 2011-2012 academic year (which I know you know, just stating that as a possible contrast to a loan from last year).

Did you file another FAFSA for this current academic year? That's the only mechanism through which Federal Loans are made. If there's a FAFSA on file for you for the current academic year but you didn't file it, it is indeed fraud.

This is overwhelming and the system is a little byzantine, but this is not unfixable!

A rundown of what you need to check:
-Date of FAFSA filed for the first loan you definitely knew about.
-Date of FAFSA filed for the mystery loans.
-Track that money! Where did the first $10K go? Can the lender confirm check was cashed? If so, by whom?

Make notes of everyone you speak to in one central location/notebook/word doc. Name, title, agency/organization, time, date, what you discussed.
posted by heathergirl at 3:48 PM on February 18, 2012

Best answer: I would calm down until you can talk to your schools aid office. Talk to them BEFORE you talk to the bursar, because they most likely aren't on the "why did this happen" end of things. I worked in a financial aid office, and once you sign the MPN, you really DONT have to sign anything else for that academic year. They probably dispersed the money assuming you'd still need it- and can return it directly to the lender for you and cancel any future dispersements - no problem-

Did you check your account (with your school) and see if they sent you a check for 10,000 that was never cashed? Money from 6 months ago can probably not be returned interest free, just fyi.
posted by sarahnicolesays at 3:51 PM on February 18, 2012

Most likely you unwittingly accepted the entire loan offer for the year when you responded to your financial aid award. It happens more often than you would think.

The first thing I would do is contact your financial aid office, have someone walk through your account with you (tuition+ fees for each semester) and determine how much in loans you should have actually taken out for the year.

Then make sure all of the remainder is accounted for in refund checks to you. If you never received a refund check that should have gone out to you, contact the accounting office and request them to put a stop payment on the check, they can then reissue it to you.

Once you are certain that all of the funds are accounted for, determine the amount that you meant to keep in refunds to use for your room & board, etc.

Whatever is left over is the extra amount that you didn't want. Speak to your financial aid office to see if it's too late to reduce your most recent loans that were disbursed. If they can do it on their end, then you will just be billed back the refund and you can pay back your refund straight to the school.

If not, you will need to contact your loan servicer and work on putting the extra money to pay down your principal balance. Federal loans don't carry any punishment/fees for paying off early, so you should be okay.

The most you may be out from this ordeal is the interest that has accrued since the unnecessary loan was disbursed. I wouldn't sweat the rest.
posted by Think_Long at 4:03 PM on February 18, 2012

Best answer: Like other posters have said, it's likely that it's the total amount you were eligible for and it was assumed that you wanted that entire amount if you didn't specify otherwise. Where I work (in a financial aid office), the entire requested loan amount is disbursed to the student's bill and then the student requests the refund amount they want. If you got a $10,000 loan and then only request a refund of $3,000, we'd send you a check for $3,000 and the rest of the loan would sit on your account as a credit. Perhaps your school does the same thing, and now that a new term has started the school is refunding your credit to you.

In any case, this is something that happens a lot and you can easily fix the problem. Don't panic, just go to your financial aid office on Tuesday and speak with them. If you intended to take out a smaller loan, you will just cancel the portion you don't want and the money will be returned to Direct Loans.
posted by Sal and Richard at 4:24 PM on February 18, 2012

Response by poster: Thanks for all your suggestions, information, and calming words!

Here are a few more details in response to heathergirl and others:

My one (and only) FAFSA was processed on 5/26/11
There are no other FAFSAs on file for me on the FAFSA site.
According to the FA section of my student account, I was offered, and I accepted $5,550 of federal student loans on 5/31/11 for the summer.
I started my program in June of 2011.
According to the FA section of my student account, I was offered, and I accepted $10,200 of federal student loans on 9/6/11 for the Fall 2011 semester
My student account shows the loan money was received by the school on 9/26/11
According to the FA section of my student account, I was offered, and I accepted $10,199 of federal student loans on 1/23/12 for the Spring 2012 semester
My student account shows the loan money was received by the school on 2/6/12.

I specifically remember the point on my school's financial aid site in which I was asked to accept or decline the financial aid offer, and to enter HOW MUCH of the offer to accept, I remember being quite careful, double checking, etc, that I only accepted the amount I wanted...sure, I could have screwed up, but it seemed relatively straightforward at the time...

I'm still trying to figure out where my copy of the MPN and other loan documents are...working on that...


As for tracking the missing $10,000:

I got the school's Treasury office on the phone on Friday (the bursar's office was already closed for the weekend), and they said they couldn't help me without a check number, which my student account unfortunately does not provide.


I think I may have just figured out where it is (and yes, my face is a little red for not realizing this earlier). I'll have to wait until Tuesday to confirm this, but I think the bursar probably still has the freaking check! I realized they normally hold the refund checks at their office, unless you tell them you want it mailed to you. The reason I got this check is, (I'm remembering now) that I did get an e-mail from the bursar about a week ago telling me my refund check was ready. I remember shrugging, figuring I'd overpaid a fee by some small amount and they were returning the money, and asked them to mail it to me. This $10,000 check was mailed to me soon after.


I'm guessing (hoping) if I call up the bursar on Tuesday, they'll say sure, we've still got your refund check.

But that doesn't solve the mystery of the $20,000 student loan.

sarahnicolesays: Good idea - I'll just confirm that the bursar has that missing check, then contact the FA office to sort out the issue of the unwanted loan - thanks.

Think_Long: If this loan was taken out without my authorization (and I'm still confused as to how or if that's possible), is there no way I can avoid paying that $137 of interest? I mean, I can pay it without starving, but if it wasn't my fault (yes, that is TBD), might I have recourse to avoid that?

Sorry for the wall of text, and thanks for everyone's help.
posted by Salvor Hardin at 4:36 PM on February 18, 2012

Response by poster: Update: I checked my e-mail archive, and I did indeed get an e-mail from the bursar on 9/30 telling me my refund check was ready, and if I wanted it mailed, I'd have to e-mail them to confirm. I guess I didn't notice that e-mail, or just forgot about it. *facepalm*
posted by Salvor Hardin at 4:40 PM on February 18, 2012

Phew! Glad this is not turning out to be a Worst Case Scenario. Keep us posted. Enjoy the rest of your weekend!
posted by heathergirl at 6:08 PM on February 18, 2012

Mrs. Smoobles just spent the last few years working in financial aid, so here is the insider's tip.
Financial aid fraud is the next big thing you haven't heard of. It's as big or bigger than medical insurance fraud.
Consider yourself a victim of identity theft and consult your Attorney General's office and Social Security ASAP. We're talking organized crime here headquartered in the Mississippi and Alabama areas.
posted by No Shmoobles at 7:23 PM on February 18, 2012

Well before we jump to financial aid fraud, it sounds to me like miscommunication. It's possible the OP accepted the entirety of a financial aid package from the school to cover the whole year. Talk to the school first. Worst case scenario, you pay back the whole loan with these 2 checks and have to eat the $137 interest. Bad, but not as bad as identity theft.
posted by asciident at 11:38 PM on February 18, 2012

Best answer: Think_Long: If this loan was taken out without my authorization (and I'm still confused as to how or if that's possible), is there no way I can avoid paying that $137 of interest? I mean, I can pay it without starving, but if it wasn't my fault (yes, that is TBD), might I have recourse to avoid that?

Depending on how your school disburses the aid, you probably did give them your authorization, even if you didn't realize it. A lot of the loan process is contingent upon the student. For instance, the lender would point out that they mailed you a disclosure statement once the loan was disbursed, your school would scold you for not checking your student account enough, etc. etc. This will probably have to just be a lesson learned. Again, talk to your FA office and see if it's too late to reduce the loan on their end.

Also- aren't you still in deferment? You shouldn't have to pay any interest right now.
posted by Think_Long at 7:59 AM on February 19, 2012

When I was in college, there was another student with the same (almost) name as mine and our financial packages got mixed up ALL THE TIME. This was before computers were really widespread, so YMMV, but it might be a good idea to check the student directory to see if there is someone else with a very similar name.

You probably wouldn't be able to check if someone has a SSN one digit off from yours, but that is also a possibility.
posted by CathyG at 10:08 AM on February 19, 2012

Response by poster: you probably did give them your authorization, even if you didn't realize it

Gah, well, it's baffling to me how that could be possible, but I'll accept that I may have misunderstood something or messed up. And yes, the unsubsidized loan is still in deferment, which means (as I understand it) that I don't have to pay the interest until I finish my program, but it still accrues.

I'll let y'all know (in case you're curious) what the FA office says on Tuesday.
posted by Salvor Hardin at 10:00 AM on February 20, 2012

Response by poster: Update:
Well, it turns out my school does in fact have an opt-out policy for student loans. I apparently did fill out a FAFSA for 2011-12 at the same time as I filled out the one for 2010-11. I accepted the right amount of loans from the amount offered for 2010-11 in June, but I never noticed that they offered me loans for 2011-12 in September, so I never checked the FA website, which means I "automatically" accepted the full amount.

The FA office told me that since they were cancelling the loans, the interest would disappear. As of this evening, the loans are gone from my account (yay!), but the interest is still there (boo) . . . we'll see :(

Thanks for everyone's help.
posted by Salvor Hardin at 5:10 PM on February 26, 2012

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