Student Loan Nightmares Amidst ACS Complaints

Palmdale, CAWhen Affiliated Computer Services (ACS) was purchased by Xerox in the fall of 2009, the company had already been the subject of inquiries by the Securities and Exchange Commission (SEC) and grand jury proceedings pertaining to stock option grants and the accuracy of certain customer records, according to the New York Times (9/28/09). At the time of the sale, a spokesperson for ACS said that the events leading to SEC scrutiny had been "put behind us," according to a spokesperson. Three years later, it's apparent that for students holding loans managed by Affiliated Computer Services, ACS complaints are still common.

The angst also extends to Access Group, which in one student's case involves a loan originally held by Access Group but having since been taken over by ACS. In a posting on ConsumerAffairs.com, Matt from Studio City, New York wrote on October 9 that before ACS acquired the management of Access loans, "I was under the IBR plan for about a year with Access Group. Once my year was up, my loans had been sold to ACS. I submitted my application to renew my IBR status. I never heard back from them. After waiting and waiting and seeing that they had not accepted my IBR application, I placed a call (even though their paperwork says that they will contact you, acceptance or rejection). They told me to re-submit. Fair enough. In the meantime though, they had to put me in forbearance, during which time, additional interest would accrue that would be compounded into principal. How convenient for them."

There are several complaints in kind, and one student from New York noted she has started a class action lawsuit against ACS citing ACS unfair business practices.

Student loans can be the bane of many a student and their respective families. Government loans, which are forgivable in some circumstances, are limited to $7,500. However, given the rising costs of tuition, students in greater numbers are turning to private sector sources in order to fund an education.

Tracking such loans gets complicated, given that student loans are often sold to other investors, much like mortgages were at the time of the mortgage meltdown.

One heartbreaking story involves Francisco Reynoso of Palmdale, California. He co-signed student loans for his son to study music at Berkley. According to a ProPublica posting in the Huffington Post (6/14/12), Reynoso has been living a nightmare since his son, Freddy—having graduated and actively seeking employment in his chosen profession—rolled his car returning from a job interview and died.

His government loan was immediately forgiven—loans through the feds are wiped from the books should a student die—but the remaining loans are held privately and difficult to track.

Apart from ACS complaints, Freddy's original private loans were handled through Education Finance Partners (EFP), which is no longer in business after settling allegations that EFP advanced payments to colleges in exchange for steering students to EFP loans that were described as 'high interest,' according to ProPublica. EFP never admitted to any wrongdoing and filed for bankruptcy a year after the settlement.

One small loan, originating through Bank of America, was at $7,400 as of the end of March this year. The other loan was originally facilitated through EFP with credit advanced from UBS, a Swiss bank, which extended $160,000 in credit to Freddy Reynoso. ProPublica reported that a lending disclosure document from 2009 projected that were Freddy to make all payments as scheduled, the final bill for the now-deceased student's education would be $279,000.

The loan is now serviced by ACS Education Services, which as of June 14 had not responded to Francisco Reynoso or his legal team, citing privacy reasons in spite of Francisco's full consent.

Could ACS's refusal to deal with, or comment on Freddy's unpaid student loan described as ACS unfair business practices? And how would his grieving father, Francisco, pay such a looming debt based on his fees as a gardener? His income for 2011 according to tax records was $21,000.

Meanwhile, there continues ACS student loan administration complaints from other camps. Student Sarah, from Eden Prairie, Minnesota, posted to ConsumersAffairs.com on September 10 that "when my student loans started getting serviced by ACS within the last year, they unilaterally consolidated four of my federal consolidation loans into two.

"Every year while in law school, I consolidated my student loans from the previous year in order to lock in the interest rates. This resulted in four consolidated federal loans (two subsidized and two unsubsidized). For over five years, I made payments to Kentucky Higher Education and The Student Loan People without any issues. I knew which loan correlated to which year in school and could see the specific loan amounts for each school year. I kept my own records at home and would track my payments as they were applied to each loan.

"When ACS started servicing my loans, they immediately consolidated the four federal consolidation loans into two larger consolidated loans, without asking me or telling me. Despite my repeated requests and demands over email and phone (five, to date) that they "unconsolidate" the loans and their eventual agreement to do so, they still have not. From my perspective, this is an attempt to obscure the details of my loans and avoid transparency. Moreover, they have lied to me multiple times by telling me that they will separate out my loans but are failing to do so."

Thus, the ACS complaints continue.