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 Specifically, she rescinded Obama-era guidance that would take into account borrower outcomes and customer satisfaction when awarding federal servicing contracts to student loan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.
Don’t rely exclusively on your servicer for information about your student loans.
The reality is that you may not be getting complete or accurate facts. Corroborate what you’re being told from other trusted sources like the Dept. of Education’s own website; the National Consumer Law Center; The Institute for College Access and Success; or a professional specialist in student loan issues who can provide you with a one-on-one analysis.
Don’t be afraid to escalate an issue to a supervisor or manager.
Often front-line customer service staff at student loan servicing companies are ill-equipped or poorly trained to handle disputes, complex questions, or complicated student loan situations. If you’re concerned that your situation isn’t being handled properly, calmly ask to speak to a supervisor or manager; you may have better luck.
Keep phone call logs, and retain records of all correspondence and payment histories.
You have no idea when some future problem or dispute may arise, and you can’t necessarily rely on your servicer to keep your records handy and accessible. If your servicer told you something, you want to make sure you have some sort of documentation for future reference. Keep copies of all letters, retain transaction histories, and jot down key facts about every phone call (the name of the agent you spoke to, the time, the date, and what was discussed).
Follow up frequently.
If you submitted a form or application to your servicer for processing, or if you have an issue that is being reviewed, don’t just submit it and assume that it will be handled promptly or efficiently. Call back at least once every week or two to check in and see where things are in the process. If it looks like it’s not being handled correctly, call back even more frequently. If necessary, escalate the matter to a supervisor, or file a dispute.
If you have a dispute, do it in writing.
That way there’s a record of it. Some servicers have their own internal escalation units where you can submit a written dispute. You can also file a dispute with the U.S. Dept. of Education, your state Attorney General’s Office, the credit bureaus (for credit report issues), and the federal Consumer Financial Protection Bureau. Sometimes, it’s a good idea to file a bunch of disputes all at once – being barraged by multiple sources for the same issue can motivate a servicer to address it.