The Wisconsin State Journal SOS column

Curt and Vickie Kneifl of rural Stoughton, like most parents of college students, are well-schooled on the topic of student loans.

Over the years - 2007 to 2011 - while their son Jake was in college, they co-signed three student loans through Sallie Mae, the giant, for-profit student loan outfit.

The Kneifls decided last month to pay off the loans they had co-signed: The interest rates were high, and it was a good deed on behalf of their son, who has other loans he is paying off.

So the Kneifls called Sallie Mae and got the payoff amounts for the three loans, the original amounts of which were $8,570, $5,200 and $2,500. Two of the loans were "Smart Option Student Loans," which are a popular Sallie Mae student loan.

The total to pay off all three loans came to $17,788.81. On June 18, they sent a check to the address requested by Sallie Mae, noted the account number and the origination of all three loans, and requested confirmation of the full payment.

"When my son called a couple of weeks ago to make sure the account was paid in full, he was told that there was still a balance on all of the loans," wrote Vickie to SOS.

"He was also told that part of our payment was applied to a separate loan that he had taken out independently."

That means that instead of paying off the loans, Sallie Mae paid some of each loan, including one that was not theirs, thus leaving all unpaid and accruing interest for Sallie Mae.

Vickie said after several calls, no one seemed able to correct, or acknowledge, the error. On July 12, she called SOS, and sent a copy of the payoff letter to Sallie Mae and asked for help re-directing their payments to the correct loans.

SOS, forever optimistic, read the background on the billion dollar education lender, including the recent attention it has received from the new federal consumer agency, the Consumer Financial Protection Bureau. The CFPB has focused on private student loan practices, and it is not pretty.

But Sallie Mae, in the person of Patricia Christel, responded to SOS on the same day, asked for additional information and got permission from the Kneifls to discuss it. That was a Thursday, and on Tuesday Christel wrote to SOS: "Our customer advocacy team researched this question and identified that indeed we made an error when we applied the payment. We are fixing this so that there is no cost to the family."

Amanda Holt, director of customer advocacy and communication for Sallie Mae, reported a few days later that the Kneifls' loans were paid in full, and they also received a $34.87 refund.

"We apologize for the error and are glad for the opportunity to correct this for the Kneifl family," she wrote.

Exactly how the error occurred was not clear, but sending multiple payments at the same time to different addresses may have contributed to a series of unfortunate events.

Always trying to help, Vickie Kneifl noted her son has graduated from UW-Milwaukee, still has loans to pay off and, by the way, is looking for a job teaching English or history.

(c)2012 The Wisconsin State Journal (Madison, Wis.)

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