We all know student loan servicing is a mess, and it has been for a long time. The federal government spends hundreds of millions of dollars on private companies to handle student loan accounts, but these companies have been the subject of widespread complaints and major lawsuits due to misconduct and poor outcomes.
The Obama administration had begun to take steps to reign in bad student loan servicing conduct, but Betsy DeVos – the Secretary of the Dept. of Education appointed by Donald Trump – has begun to roll back these initiatives. Specifically, she rescinded Obama-era guidance that would take into account borrower outcomes and customer satisfaction when awarding federal servicing contracts to student loan companies. She also appeared to pull the plug on an attempt to simplify and centralize student loan management through a single web portal, which would have effectively allowed borrowers to bypass their student loan servicer.
It’s an uncertain and frustrating time for student loan borrowers. However, there are steps you can take to protect yourself from servicing errors and misconduct. While these steps are of course no guarantee that you’ll avoid problems managing your student loans, they may help.Read More