Sean P. Murphy | The Fine Print

Penalized for making a student loan payment early — not late

Arnie Greenfield.
Arnie Greenfield.(David L Ryan/Globe Staff)

Arnie Greenfield says he has no complaints about helping his children pay off their college loans. An engineer and high-tech executive, he says he’s grateful to be in a position to do so.

But he does have a problem with being penalized by a bank for making an early payment. Yes, that’s right. Not late, early.

“It was the theater of the absurd,” Greenfield said of his dealings with American Education Services, the company that administers the loan for PNC, one of the country’s biggest banks.

This infuriating drama began last month when Greenfield made the 48th consecutive, on-time payment on a loan for his oldest son, Max, who graduated from New York University in 2013. Greenfield is pretty well organized and he knew that he had hit an important milestone in making that particular monthly installment of several hundred dollars, shared by father and son.


After 48 on-time payments, Greenfield could ask the bank to remove him as a cosigner on the loan.

As a cosigner, he was every bit as responsible for it as his son, plus it counted as part of his overall debt on his credit score. With three more children to put through college, Greenfield was looking to keep his options open for future borrowing.

“I wanted the flexibility it gives,” he said.

PNC entitles cosigners to be released from all responsibility upon making the 48th consecutive “timely” payment, a feature the bank promotes prominently on its website. The release of a cosigner also requires the primary borrower — in this case, Max — to provide proof of income and pass a credit check.

Greenfield and his son, who lives and works in New York City, qualified, so far as Greenfield could tell.

So Greenfield called American Education Services to begin the process, only to be told that was not the case. The customer service representative apparently was looking at a month-by-month accounting of Greenfield’s loan payments: 48 boxes on a spreadsheet since payments began in early 2015.


“You can’t be released because you missed a payment in October 2015,” the customer service rep said.

Greenfield knew he had never missed a payment. He had been debited for every one. And he certainly had never received notice of a missed payment. He asked the American rep to look again.

That’s when Greenfield realized he had become the victim of mindless, bureaucratic bean-counting at its worst.

The loan payments are due on the third of the month. The records the American representative referenced on the phone with Greenfield showed he paid the October installment on Sept. 30, 2015, three days early.

In most cases, a creditor would be delighted to receive early payment. But in this case it spelled trouble, because the September box was already checked off, by a payment made on Sept. 3.

In other words, the loan had two checks credited for September and none for October.

Upon closer examination, at Greenfield’s urging, the American representative confirmed that there were two payments tallied in September.

You would think American would quickly see the light and drop Greenfield as the cosigner.

Think again.

“We consider that a missed payment,” the American representative told him.

Greenfield spent almost an hour on the phone. He got bumped up to a supervisor. No matter.

“They insisted that, because there was no payment credited in October, for their own internal counting purposes, it was a missed payment,” Greenfield told me.


The absurdity of it actually made Greenfield laugh. But American was serious.

“I said, ‘If you have an appointment at 8 p.m. and you arrive at 6 p.m., you haven’t missed the appointment.’ But they just kept repeating that I missed a payment,” Greenfield said.

Greenfield wrote to me asking for help: “It’s not that big of a deal, to be honest, but it’s amazing to me how absurd it is.”

I called American Education Services. At first, a public relations representative defended what had happened. I said it was contrary to the plain meaning of the language on the PNC website.

Soon, American called Greenfield to say they would make an “exception” on his behalf. He was removed as the cosigner.

I also contacted PNC. A bank spokeswoman confirmed my reading of the language on the PNC website as correct. No exception was needed. Greenfield did everything he was supposed to do. He was entitled to be dropped as a cosigner.

 Talk about Kafkaesque.

Sean P. Murphy can be reached at Follow him on Twitter @spmurphyboston.