I recently reconsolidated my school loans, and I signed the promissory note, which indicated that my loans were at a fixed interest rate of 3.125%. The company that is handling my loans sent me a payment schedule based on a 4.125% interest rate. I, of course, called them to dispute this matter. At first, the representative totally denied even knowing where I got the 3.125% figure from, but when she could no longer deny the quote, since I had a copy, and she had my signed copy, she then stated that the company that previously handled my loan later sent them a new quote for my loans of 4.125%

When I called my previous loan handler to confirm what the representative said, I was told that my loan rate was originally 4.125%, but 1% was deducted as a reward/benefit for my timely payments.

My question is this... Whether or not the 1% difference was a borrower benefit, am I entitled to keep that rate, since that's what I signed for in the promissory note? After all, I never would have reconsolidated if I knew that my rate would go up, thus increasing my debt, not lowering it. My new loan handlers claim that there's nothing I can do, but there must be something. It's a legally binding contract, and they shouldn't be able to just change my fixed rate to a rate that I didn't sign for.

What should be my next course of action. Please help.

You have to carefully read the entire promissory note. Look for any type of language that gives them the right to increase the interest rate. Make sure you read every single line of that promissory note. That kind of language can be buried in there.

If you can't find anything that says they're allowed to charge you more than 3.125% then tell them (by certified mail, return receipt requested, and a copy by regular mail) that they must show you where you agreed in writing to a higher rate. Also tell them that, until they can prove it to you, you will continue to pay the rate shown in your written agreement with them. Finally, tell them that if they make any attempts to place any type of negative comments against your credit you will hold them responsible for damages, court costs and legal fees.