Dealing with student loans is hard enough. Poor federal student loan servicing and negative experiences with your lender only make it more frustrating and complicated.
There are numerous ways in which your relationship with your student loan servicer (for either federal or private loans) can go sour. But there are also various ways you can resolve your issues with federal student loan servicing. Here’s what you need to know.
What is federal loan student servicing?
There are 44.2 million American student loan borrowers who owe $1.41 trillion dollars in student loan debt this year.
Federal student loan servicers play an integral role in managing student loan borrowers’ payments. Although your student loan servicer is different than you lender, it acts as a liaison between you and your lender.
Some of the responsibilities student loan servicers execute include:
- Collecting and tracking student loan payments.
- Reporting your repayment history to credit bureaus.
- Applying student loan payments per your instructions.
- Processing applications for income-driven repayment plans, deferment, or forbearance.
Unfortunately, federal student loan servicing isn’t always a smooth process. There are currently nine loan servicers for millions of student loans. This makes it nearly impossible for student loan borrowers to have consistent and quality service, responses, and assistance.
3 ways to solve federal student loan servicing issues
A student loan borrower may hit a snag in their federal student loan servicing at some point during their repayment journey. Common issues with federal student loan servicers include:
- You have difficulty making payments. Your servicer gives you inconsistent information about plans that will reduce your payments. There are delays in processing your paperwork applying for such plans, or your paperwork keeps getting “lost.”
- You have multiple loans with one servicer. Plus, the lender doesn’t administer your payments in the manner you designate.
- Your loan is in default when it shouldn’t be. Or, your servicer has reported inaccurate information to the credit bureaus.
It can feel like borrowers are simply at the mercy of student loan servicers. But that’s not true.
Whatever your student loan servicer complaint, there are options at your disposal to help you resolve a problem. Here are some strategies to help you address such dilemmas.
1. Start with your student loan servicer
Any attempt to solve problems you are having with your student loans needs to start with your servicer. Here are some tips for dealing with your servicer directly:
Don’t be emotional.
Stay calm, explain yourself clearly, and keep asking questions until you get the answers you need.
You’re more likely to articulate your problem clearly if you keep a level head. Not to mention, the customer service rep is more likely to go out of their way to be helpful, and your problem is more likely to get solved.
Take names and notes on all your conversations. You may even want to download an app that records your cell phone conversations so you can remember all the details. However, different states may have laws regarding recording calls, so make sure you abide by them.
Keep originals of all emails and correspondence. Send any letters by certified mail with a return receipt requested.
Follow up and be available.
Ask for a specific timeline by which you can expect a resolution, and if you don’t hear back, follow up. Additionally, check your email, snail mail, and answer your phone whenever the servicer calls. Avoidance won’t solve the problem.
Before seeking the help of an outside entity, it’s important to do everything you can to address the problem on your own. It’s not just for your peace of mind, either. Any external body you reach out to will ask for proof that you tried to handle your issue(s). So keep your records at the ready.
2. Contact the Federal Student Aid Ombudsman Group
If you’ve tried and failed to solve a problem with YOUR student loan servicer and you’re dealing with federal student loans, it’s time to turn to the Federal Student Aid Ombudsman Group.
The Ombudsman Group, a branch of the U.S. Department of Education, is a neutral and confidential third-party organization that helps resolves issues with federal loans such as Direct Loans, Perkins Loans, and more.
A student loan ombudsman will research your problem, work with your servicer and any other appropriate entity to help you identify and evaluate solutions. They can also refer you to other resources or organizations as necessary.
One of the first things the Ombudsman Group will ask for is documentation of your problem, which is why it’s so important to keep detailed records. Count on them to provide you with accurate information and serve as a reliable resource if you have a federal student loan servicer complaint.
3. Reach out to the Consumer Financial Protection Bureau
If you’ve tried and failed to solve a problem with a private loan servicer, you can file a complaint with the Consumer Financial Protection Bureau (CFPB).
Like the Ombudsman Group, the CFPB is a neutral third party that can help you come to a resolution with your student loan servicer.
Again, what will give your CFPB complaint legs is the fact that you’ve attempted to address the issue on your own. In fact, when you file your CFPB complaint, you can attach documentation to contextualize and clarify the issue.
Double-check your credit report for student loan servicing errors
Whether your student loans are federal or private, if you believe that inaccurate information was reported to the credit bureaus, you can file a consumer dispute with Experian, TransUnion, and Equifax.
And even if you don’t have any issues right now, periodically checking your credit reports is an easy way to protect your credit score. Plus, you’ll be aware of any inaccuracies immediately.
You can get one credit report from each of the three major bureaus every year through AnnualCreditCeport.com.
Review your student loan servicers ASAP
Knowing whether your servicer has a reputation for poor customer service can also help you make the long-term decisions that will be best for your financial health.
If possible, check out student loan servicer ratings before taking out loans to help ensure you’re making the right choice for you.
Hopefully, your repayment journey goes smoothly. But if disaster (or simply frustration) strikes, it’s important to have as much information as possible at your fingertips.
Elyssa Kirkham contributed to this article.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.50% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 17, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/17/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.49% effective March 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.50% – 7.27%1||Undergrad & Graduate|
|2.50% – 7.12%3||Undergrad & Graduate|
|2.53% – 8.79%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.55% – 7.12%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|