When I went to check the statement on my wife's student loan through CitiBank for November, I noticed a late fee listed. As we signed up to pay via direct debit for the interest rate deduction, we get no paper statements. I checked my records, and our last payment had been processed for the full amount, on the due date. I asked my wife to call and find out why we were being charged a late fee. The representative told her that it was to correct an error from 2005. There is no explanation on the site, and when my wife asked to speak to a supervisor, the supervisor told her that there were no plans to notify people being charged these fees. My wife had to specifically request that a letter be sent detailing these fees.
Rather than the $175 dollars we usually pay each month, the automatic deduction this month will be $225. We have the funds available to cover this difference, but many people with tight budgets may not. The only option to avoid this jump is to cancel the automatic payment (and lose the interest rate reduction). Of course, this doesn't help if they are going to report you as not paid-in-full or as delinquent to the Credit Bureaus. It seems very shady that they would suddenly up your payment, charge late fees from 2 years ago, and not provide any notification. From what my wife understood from her conversation with the CSR, this is something they've done with loans across the board, including some which may have been listed as paid-in-full.
This is an easy one to figure out. Their CEO just resigned as a result of the sub-prime mortgages. Citigroup originally stated that they had taken losses of $6.5 billion in the third quarter. They have now revised that number to $8-11 billion. In addtion their total exposure for debt is $43 billion. The Nikko has downgraded their stock as has Moody's. Both are looking at additional downgrades. Their shares have dropped from $57.00 at the beginning of the year to $35.00. Currently they have -$43.65 billion cash operating cash flow.
The bottom line is any little bit they can make up they will and who better to stick it to than recent graduates and young working adults. 50% of them finished at the botttom of their class and even more than that really don't pay attention to their finances.
The next time you get one of those e-mails or fliers to refinance I would take them up on it just for the principle of the thing. Any company that won't provide documentation when requested deserves a second look. (I don't even remember even taking a student loan thru Citibank. I wonder if it was sold to them somewhere along the line.)
Love to both of you. I have to think very carefully about my Christmas gift this year. "The Wealthy Barber" has created another astute financial team. (I would be so bummed if you made your first million before I actually had a positive balance on my income statement. Then again I may have to work until I die just to pay off my own student loans.) ;-D