How to resolve issues with your loan servicer

If you have been watching the news, you know Student loan servicers have been under scrutiny from organizations like the Consumer Financial Protection Bureau (CFPB). They have been staunch advocates for borrowers against deceptive and unethical servicing practices by loan servicers which have defrauded millions of borrowers out of student loan forgiveness. The Department of Education (ED) has made significant changes to “right these wrongs” with their most recent changes and updates to several repayment programs. Every borrower must understand their rights and responsibilities as a federal loan borrower. Additionally, those who encounter difficulties with servicing companies must understand how to submit a complaint to ED about their experience. Here are some essential resources that you may want to keep on file.

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Where to Go for Help with Student Loan Servicing Companies

It may seem as if you don’t have any options for recourse when it comes to difficulties you may be experiencing with your federal loan servicer. However, fret not! You have options.

Student Loan Servicing Companies

Unfortunately, the best place to start is with your loan servicer and attempt to work directly with them to resolve your issue. If you do not know the department, call your servicer’s customer service number and ask a representative to connect you with a supervisor. Escalating the call to a supervisor will ensure your concerns and complaints reach management. Ensure you get the names, departments, and contact information of each person you speak with or have spoken to for documentation purposes. Also, by having their contact information, you can access them directly, eliminating the “phone tree system” if you have to make follow-up calls. If you are unsure who your loan servicer is, you can contact Federal Student Aid. They can provide you with your loan servicer’s name and number.

Federal Student Aid Ombudsman Group

Suppose your loan servicer fails to resolve your issue, or you feel you were given incomplete or inaccurate information. In that case, your next step is to file a complaint with the Ombudsman Group. This group is neutral, informal, confidential, and, more importantly, dedicated to helping federal loan borrowers resolve their issues. It is important to note that this group does not directly advocate for borrowers but will help borrowers figure out their options and remedy any discrepancies in loan or repayment figures.

Consumer Financial Protection Bureau (CFPB)

The Consumer Financial Protection Bureau is responsible for protecting consumers in the financial sector. They employ an ombudsperson; complaints are accepted online and by phone at 855-411-2372. For complaints involving federal loans, the CFPB will collaborate with ED by providing them with expert analysis and recommendations for a resolution consistent with Federal consumer financial laws.

State Attorney General

Each state has a state attorney general designated to investigate consumer complaints of fraud, deception, or unfair business practices. The complaints are investigated and, if necessary, referred to the appropriate agency that is responsible for resolving the issue.

National Foundation for Credit Counseling

Certified counselors who provide services through the National Foundation for Credit Counseling can assist student loan borrowers. The agency also offers online articles and tools like repayment calculators for consumer use. This nonprofit organization connects consumers with local member agencies for customized assistance. Counselors work with borrowers to identify solutions that will best fit an individual situation in conjunction with personal and professional goals and obligations.

Background on Repayment Issues

 The largest consumer debt in the United States is student loans. Therefore, it seems logical that many borrowers will have questions, thoughts, or concerns regarding their student loan indebtedness. So, if this describes you, then take a little comfort in knowing you are not alone. Federal agencies and watchdog groups have reported many serious issues related to loan servicing (inaccurate information, denial of repayment options, mishandled payments, and customer service), incorrect account statuses, and credit report issues.

Hundreds of borrowers report that they have called and asked about the Public Service Loan Forgiveness (PSLF) program and did not receive complete or accurate information about enrolling. Those who did complain of inaccurate record-keeping.

Many agencies and watchdog groups are working diligently to address claims that student loan borrowers aren’t being protected from practices that leave them vulnerable to abuse and deceptive practices by the companies whose responsibility is to serve them. The greatest advocate for change and protecting student borrowers is the CFPB. This year alone, they have issued millions in penalties against student loan servicers. In March, EdFinancial Services was issued a $1 million fine for misleading borrowers about loan forgiveness.

Navient, the largest loan servicer in the United States, has been under scrutiny for many years and has faced several lawsuits involving deceptive and predatory servicing practices, including claims of misallocating payments, forbearance steering, and providing inaccurate information related to Income-Driven Repayment (IDR) plans. In January 2017, the CFPB and six state attorney generals filed lawsuits against Navient. In January, a settlement was reached with Navient, which includes $1.7 billion in debt cancellation and $95 million in restitution. Of course, Navient denied any wrongdoing but agreed to the settlement because the state lawsuits began more than eight years ago and were nowhere near the trial stage.

Common Problems with Public Service Loan Forgiveness

PSLF requires ten years of qualified repayment under an Income-Driven Repayment (IDR) plan. Loan forgiveness is not automatic, and to ensure you’re on the right track, you must avoid these common mistakes:

• Not submitting the Employment Certification Form (ECF) each year, preferably when you submit your IDR recertification.
• Missing or incomplete information on your ECF form,
• Not consolidating your FFEL, Perkins, or parent PLUS loans
• Not enrolling in an IDR plan
• Failure to recertify
• Staying in deferment or forbearance
• Missing payments
• Not being strategic with early or extra payments

Staying on top of these things is essential – it cannot be understated how important – to completing program requirements and eligibility for loan forgiveness.

Documentation Is Critical

Good record-keeping is essential to practical problem solving for federal student loans; these companies handle the repayment of thousands of students’ accounts. When seeking help, ask specific questions and document the answers received. Where appropriate, request written confirmation of things like enrollment in the PSLF program. Hold onto statements of loan balances and repayment transactions until the loan is repaid. This kind of information will be invaluable if it becomes necessary to raise an issue with student loan servicing companies.