The nation’s largest provider and servicer of student loans has altered its policy of forbearance fees after one recent graduate collected over 76,000 signatures in a petition claiming that these fees preyed on unemployed borrowers.Sallie Mae (NASDAQ: SLM) will change how it handles a $50 fee that is charged to struggling borrowers who wish to suspend loan payments. Borrowers who entered forbearance on or after Jan. 1 will now have the fee applied to the loan balance. Previously, Sallie Mae pocketed the $50.
Sallie Mae’s retreat in the wake of a public outcry comes three months after Bank of America® cancelled plans to impose a debit card fee.
The decision came after an online petition at Change.org gained enough traction to convince the private lender to ease the burden on borrowers.
The Change.org petition was started by Stef Gray, a recent graduate in New York City.Having finished school last May, Gray was unable to secure full-time employment with an advanced degree in a technical field. Gray is facing a 9.75 percent interest rate because she does not have a co-signer.
She has paid $300 to Sallie Mae in forbearance fees since May of last year. The $50 fee was charged every three months that loan payments were suspended. Meanwhile, the principal remains the same and interest continues to accrue.
Federal loans do not charge fees when borrowers defer payments.
Last week, Gray brought 76,000 petition signatures to Sallie Mae’s office in Washington, D.C. Within hours, the company changed the policy to the new terms.
However, more is sought from lender.
Keeping Up the Pressure
“I’m amazed that we’ve made this kind of progress against a financial behemoth like Sallie Mae, but it’s also clear that their action wasn’t enough,” Gray said in an update to the petition. “It does nothing to help borrowers like me who are in real financial trouble.”
Gray continues to raise awareness — hopefully enough to persuade Sallie Mae to remove the fee entirely.
“Sallie Mae isn’t going to get rid of us by offering weak half-measures. If we can keep up the pressure, we can get exactly what we asked for – an end to their greedy unemployment penalty,” she added.
As of Friday afternoon, the online petition has garnered more than 90,000 signatures. (The petition against Bank of America®’s plan to charge a $5 debit card fee collected more than 300,000 signatures.)