10/07/2013 10:57 am ET Updated Dec 07, 2013

Paying Off Student Loans But Sallie Mae Reports Late

Huffington Post Reader Question

Dear Steve,

My situation isn't terrible. I am a 55 yo learner about to (FINALLY) graduate with my BS. I am an IT professional, earn a good living at a stable position. I have a 6 month emergency fund that is not touched. I have savings, retirement .. I've been relatively smart for the last 20 years about finances. When I first went back to school, I thought it was a good idea to use fed loans. Needless to say, I changed my mind after 5 semesters and I have paid for the rest out of pocket.

I don't owe much now, as I've been making monthly payments as I've continued through school because I could. With only $2000 left, I'll make 2 $1000 payments and get it over with. BUT

Earlier this summer, I was notified that my loan, previously serviced by the Feds via Direct Loan Service Center had been moved to Sallie Mae. There must be some sort of due date issue, for although I have made monthly payments far above the minimum every month, they have placed me in default.

Of course, the right answer is to make one lump sum payment and sever any relationship. But is there any other lender, can I get out from Sallie Mae and may the payoff to someone else?


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Dear Heather,

First off, I'm a huge fan of your approach and plan. Three cheers for you.

There are some other lenders out there but essentially you'd be converting a federal loan with all the benefits into a private loan. With you having the ability to pay off the loans and being so close to eliminating them, I don't think jumping to another lender makes sense.

In the interest of life simplicity and and one less thing to worry about I'd payoff the loan as you plan and then circle back to deal administratively with the erroneous payment reporting if it appears on your credit report.

The bigger issue here is if any payments were missed being applied correctly in the transfer and that's what has caused the incorrect late payment reporting. I would hate to assume it's just an oversight on Sallie Mae and miss a real missing payment.

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