Help, My Student-Loan Check Bounced!
Hundreds of students are being affected by a credit-crunch bankruptcy
The credit crunch is starting to take its toll on college students: Several students who have turned to banks or private companies to borrow extra tuition cash in recent weeks have been shocked and penalized when the checks they received were refused. There haven't been any reports of problems with federally guaranteed Stafford student loans or PLUS parent loans.
Michael Libman, a senior at San Diego State University, said he applied for an Astrive private loan of $10,000 in February so he could pay his last semester of fees and graduate this summer. He says Astrive took weeks to send him a check after approving his application, then, when he finally received the check, it bounced. He had to ask his parents to put his school fees on their credit card so that he could finish his last semester. Libman says he called Astrive repeatedly, but, despite the company's assurances that the problem was fixed, the check bounced again on his second attempt. Astrive hasn't yet sent him a good check, he says, and he needs the money to pay back his parents, who are saving up for the college costs of his two younger brothers. Libman is working six days a week to raise extra cash, and he's cutting costs. "Ramen is my friend," he says ruefully.
Chris Blawat, a prechiropractic student at Ivy Tech in Lafayette, Ind., was relieved when he got an $8,500 Astrive private loan check in April. He deposited it, saw that it was credited in his account, and started writing checks to cover rent, utility bills, and other expenses. Then, four days later, his account was suddenly overdrawn by $4,000, and he had racked up more than $600 in bad-check and insufficient-funds fees. "I had to live off my friends and my girlfriend" for several weeks, he says, until Astrive finally sent him a good check on April 24. He says he's still waiting for Astrive's promised check to cover the banking fees he had to pay when the first check bounced.
Astrive is a prominent marketer of private loans whose ads are familiar to watchers of late-night television and visitors to education-related websites. Company spokeswoman Janice Walker says the problem was a glitch that was quickly identified and fixed. Astrive has attempted to reach all affected students, has been sending out valid checks, and is covering bad-check fees and related expenses for affected borrowers.
Astrive is a brand of Boston-based First Marblehead, one of the nation's oldest and biggest packagers of private educational loans. Walker, First Marblehead's vice president for corporate communications, says the problem was caused by the bankruptcy of the nonprofit agency that guaranteed Astrive's student loans, the Education Resources Institute Inc. TERI, which guarantees private student loans for more than a dozen banks and marketers, filed for bankruptcy April 7. In the past year, TERI had been suffering from an increase in defaults on private education loans made years ago. Some Wall Streeters began to worry late last year that TERI hadn't set enough aside to pay off its guarantees. As worries mounted, Moody's downgraded TERI's rating to junk status, which made it very expensive for TERI to raise cash and pushed the company to seek court protection.
Because of TERI's financial and legal troubles, several hundred loan checks sent out in the names of some of its clients, including Astrive, bounced, TERI says. In a letter sent to colleges on May 7 and posted on TERI's website, TERI acknowledged that there were still delays in disbursing some student loans, but it said it hoped to resolve those problems soon.
TERI has set up a hotline for students affected by the bankruptcy: 888-563-7050.
Reader Comments
RE: student loans
All college students, say heck no to private college loans!!!!! We must band together and keep together. Injustice has been handed down on a silver platter to all college students when President Bush signed into the bankruptcy reform act in 2005 making it so college students can not file bankruptcy on their private student loans. Teri, loan to learn, and sallie mae charges double and can even triple their interest rates if they so desire and they do. Do not get any more private student loans from these huge banking giants. They can clean you out on everything that you own. They don't care if you have children to feed or a roof to pay for. They take food out of the mouth of babes to pay for their Rolex watches and the Lexus cars. They don't care about how you make it as long as they can get your money. They are bankers without souls or mercy upon their own fellow citizens or neighbors.
RE: student loans
Teri,loan to learn,and sallie mae are lending preditors and prey upon college students for a particular reason. Because we simply will not be allowed to (which we can say many thanks to G. Bush and his croony banking buddies) not be able to file bankruptcy no matter,but, others with unsecured debt such as credit cards can still file bankruptcy no matter what. Bush's banking buddies wanted their friend to sign into law the bankruptcy reform act in 2005 so college students couldn't and wouldn't be permitted to discharge their private college loans in bankruptcy chapter 7. It means that a college student has to pay and is required to pay. They're discriminating agaisnt all college students. These private lenders charge incredibly high interest rates yet these same private lenders if they get into trouble, just like the wall street boys, they are able to file a chapter 11 on their business or chapter 7 in their personal lives. However, college students aren't permitted to, no matter what. You take out a loan for $20,000 dollars and you'll pay double or triple that in high interest rates. Look at what some of these banking preditors have done to the housing market. I am like, OMG!!! Its all about the greed and how much money these big banking giants can collect on their paychecks. To them, their reasoning is just about greed, greed, and more greed. Do not take any more loans out with these lenders. Write to you congressmen or congress women and tell them your circumstances, and tell them that All peopls should have the right to file bankruptcy whether its credit card debt or private student loans. People try to better themselves, and get it double or triple times the interest rates up the blank. These bankers don't care if you are trying to better yourselves or how your going to pay your bills or feed your children. They don't care. They only care about how much interest that they can make off of you. I have a daughter and baby to support. You think they care if my children have a warm meal in their bellies or a roof over their heads. Heck no, do you think that they care about your bills, your home, your children or if your children are crying out for food when their bellies are growling for food. No, they do not! They don't care. Only things in life they care for is whats the latest style of rolex watches coming out on the market and how much faster that they can get it on their wrists. Just think, the interest that they charge you, its going on the brand new Rolex watch that they are sporting around or that brand new MBW, Lexus, and jaguar that they just bought.They could careless how you make it or if your children go to bed hungry and crying late at night for food. College students all over the country should band together. Do not take out no more private college loans. No more injustice. No more discrimination agaisnt us. We are people to and want to be able to feed our families and our babies. Banks take food out of the mouths of babes.
I am a victim of the TERI bankruptcy. I have never in my life been treated so unfairly. I had a $1,500.00 student loan that was recalled due to their bankruptcy. Well, I received the check and cashed it (like any other normal check), I used the scholarship, and 11 days later it was withdrawn from my account without my notification. I had just paid all the monthly bills that month, so I had numerous fees. My fees from this totaled over $3,000.00. I received a check for $1,132.00. Now they are refusing to pay the remainder. I have contacted the BBB three times, getting just a certified letter each time basically saying sorry about your luck. I have tried contacting their attorney, who is incredibly rude. She claims that due to the bankruptcy they are only entitled to pay bank related NSF that they see appropriate to pay. How is this fair, when there was a recording at Astrive stating that I would be reimbursed in full for ANY fees that accrued due to this issue. I have spent months trying to resolve this issue. I have even had to stop taking classes to pick up extra time at work to pay these fees myself. Now tell me how is that fair, when I applied for assistance, and now I am unable to even take the classes that I have been planning on taking because of this situation. I feel like I have exhausted all options. I feel I should be reimbursed the full amount that I am owed. What can I do to get the remainder of the fees paid? Any help would be greatly appreciated. Thanks, Jacqui
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