A lot of students will be entering a student loan forgiveness program in the not too distant future. Some parents have also taken Parent Plus Loans with a plan to pay it back under the Income Contingent Repayment Program. Unfortunately, many will also encounter difficulties with their student loan servicing company. Here are some important resources that you may want to keep on file.
Where to Go for Help
Realizing that you’re having trouble with a federal student loan can be alarming; however, there are people who can help. The first step is to gather all of your federal student loan information. In general, the best place to start is your student loan servicing company.
Your Student Loan Servicing Company
Student loan servicing companies generally have a person or department that’s designated to help borrowers who have concerns and complaints about their interactions with the company. It can be a challenge to find the right person to speak to, especially when these companies don’t often make this information easily available on their website or automated telephone system menu. When speaking to a customer service representative, ask to be connected to the ombudsman or consumer advocate. Be sure to get a name and direct phone number, if possible, so that the phone tree system can be avoided next time if you need to call back. For borrowers who have federal loans and don’t know which servicing company holds their loans, reach out to the National Student Loan Data System.
State and Federal Offices
If the student loan servicing company isn’t helpful, borrowers can turn to their state attorney general. Many of these offices have a consumer advocate office. Beyond the state level, there are two federal offices where borrowers may find help. The Consumer Financial Protection Bureau employs an ombudsman; complaints are accepted online and by phone at 855-411-2372. The U.S. Department of Education is the federal agency that engages with these student loan servicing companies. Their Federal Student Aid Ombudsman Group is available; however, their services are limited and described as “last-resort”. They will not directly advocate for borrowers but will help borrowers figure out what their options are, as well as remedy any discrepancies in loan or repayment figures. The group’s online checklist is a useful tool for determining when reaching out to them is an appropriate step.
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 is a nonprofit organization that 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
For students with questions or concerns about the loan repayment or forgiveness process, it’s important to realize you’re not alone. Many have reported serious issues in dealing with student loan servicing companies. In particular, borrowers report that they have called and asked about the Public Service Loan Forgiveness program and not been given all of the information about enrollment and required record-keeping.
The Office of Students and Young Consumers under the federal Consumer Financial Protection Bureau had worked hard to address claims that student loan borrowers weren’t being protected from practices that left them vulnerable. This office was moved to the Office of Financial Education under the Trump administration. The Department of Education later stopped sharing student loan data with the CFPB, in essence tying their hands with regard to federal student loans serviced by third-party companies. The CFPB’s student loan ombudsman Seth Frotman resigned in protest in August 2018. These student loan servicing companies carry out duties on behalf of U.S. Dept. of Education.
Navient, one of several student loan servicing companies, faces several lawsuits. In 2018, attorneys general in four states filed suits against Navient. These suits claim that students were funneled into temporary forbearance (no payments but interest continues to accrue, increasing total amount due) when income-driven repayment plans were an available option. Navient has stated that the federal student loan repayment system is complex and that each borrower was directed to the best individual solution.
The attorneys general believe the U.S. Department of Education should be doing more to help students and intervene with these companies on their behalf. The Department of Education argues that because these are federal student loan programs, states have no authority to intervene.
In 2017, the CFPB filed suit against Navient for incorrect processing of student loan repayments. It’s also alleged that Navient kept borrowers from income-driven repayment plans that might have helped those who called seeking relief from financially crippling payments. Navient says they have done nothing illegal.
Common Problems with Public Service Loan Forgiveness
More Public Service Loan Forgiveness program completions are coming than people may think. There have been many media reports about the small amount of actual forgiveness going on with PSLF program (only 139 on track to be forgiven this year, the first year that anyone is eligible for forgiveness); however, it may be premature.
PSLF requires 10 years of qualified repayment plus certified employment in a public sector job, application to the program, and record-keeping to maintain eligibility and confirmation of payments/progress in the program. Staying on top of these things is essential – it cannot be understated how essential – to successful completion of program requirements and eligibility for loan forgiveness. As years go on, the number of participants and completions are likely to grow.
Documentation Is Critical
Good record-keeping is essential to effective problem solving when it comes to 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 in full. This is the kind of information that will be invaluable if it becomes necessary to raise an issue with a student loan servicing company.