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The Student Loan Servicing Struggle Is Real – But You’re Not Alone

student loan servicing company

Let’s be honest – navigating the maze of student loans and dealing with those massive servicing companies can feel a bit like wandering through a house of horrors. Between the confusing jargon, endless paper trails, and those harrowing tales of borrowers getting the runaround, it’s enough to make your head spin.

But take a deep breath, because you’ve got backup.

Across the country, armies of advocates and resources are ready to have your back when those student loan servicers start acting shady. And, of course, your friends at My College Planning Team are always happy to lend an ear in one of our free college planning sessions.

Now, let’s get into it. 

Where to Go for Help When Your Student Loan Servicing Company Is Driving You Insane

Realizing that you’re having trouble repaying a federal student loan can be alarming.

In fact, many 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 companies

But there is hope.

Here are some important resources that you may want to keep on file:

« Learn more about student loans

Student Loan Servicing Companies

For starters, most major public and private student loan servicers actually have internal support staff designated to help borrowers with complaints and concerns. Ask to be connected to the ombudsman, consumer advocate, or whatever fancy title they use for their grievance-handling pros. 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 that option doesn’t yield results, it’s time to take it up a notch. Many state attorney general offices have consumer divisions that can go to bat for you against any shady or just plain difficult servicing practices. Let’s say a lender is giving you the runaround on income-driven repayment plans or Public Service Loan Forgiveness – these AG offices love going after that sort of thing.

Beyond the state level, there are two federal offices where borrowers may find help.

Need to call in the big federal guns? 

First, there is The Consumer Financial Protection Bureau employs an ombudsman; complaints are accepted online and by phone at 855-411-2372. 

Then you have The U.S. Department of Education, which 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 a “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.

Both of these teams can dig into your case, identify your options, and potentially hold servicers accountable.

Your Loan Backup Borrower Support Squad 

But why go it alone at all? There are incredible non-profits and counseling services ready to provide personalized guidance as well. The National Foundation for Credit Counseling, for instance, has certified pros who can assist student loan borrowers by reviewing your full financial picture and detailing the best loan repayment solutions for your unique situation. 

Having an expert in your corner is huge, especially when you’re trying to navigate complex forgiveness programs or income-based repayment plans. From professional advice to online tools and calculators, they’ll ensure you’re not missing any key steps or opportunities along the way.

Counselors work with borrowers to identify solutions that will best fit an individual situation in conjunction with personal and professional goals and obligations.

The Public Service Loan Forgiveness Fiasco 

Speaking of the loan forgiveness process… yeah, that whole Public Service Loan Forgiveness (PSLF) program has been a doozy. Borrowers have reported several serious issues, including calling servicers to inquire about PSLF, only to be given incomplete or flat-out inaccurate information that could jeopardize their eligibility down the line.

Background on Repayment Issues

The Office of Students and Young Consumers under the federal Consumer Financial Protection Bureau 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 the U.S. Dept. of Education.

Even more, Navient, one of several student loan servicing companies, is currently facing several lawsuits. In 2018 alone, 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 the 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.

PSLF (The Public Service Loan Forgiveness) 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 the successful completion of program requirements and eligibility for loan forgiveness. As the years go on, the number of participants and completions are likely to grow.

What a nightmare! No wonder only a tiny fraction of borrowers successfully made it through the stringent 10-year eligibility gauntlet this year.

Document, Document, Document!

Of course, preparing for that long PSLF road is absolutely essential. Good record-keeping can mean the difference between receiving forgiveness after a decade of payments or spending the next several years arguing over discrepancies.

Make a habit of documenting every interaction with your servicer. If they confirm your enrollment in a program, ask them to follow up in writing. Track your payment histories and loan balances. Anything and everything that could potentially become a lifeline if issues ever crop up.

At the end of the day, dealing with student loans is rarely fun and games. But by knowing your rights, tapping into available support, and maintaining a paper trail, you can fight back against shady servicing practices. 

Could the system use an overhaul? 

For sure. 

But in the meantime, you’ve got an army of advocates ready to battle by your side. Sign up for a free college planning session today where you can speak with a financial advisor who will give you personalized advice for your particular situation — no matter where you are in your student loan journey.

Financial freedom awaits.

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Written by: Lindsay Muzzy

Edited by: Katherine Williams

Lindsay Muzzy has over 12 years of experience working with families from diverse economic backgrounds to navigate the complex financial aid process.

As one of the leading school counselors in the Chicago Public School system, she has also worked with colleges across the country and has developed unique insights on how to help families optimize their financial aid and boost their scholarships and grants.

Lindsay is also an expert in helping families navigate the FAFSA and CSS Profile, review their award letters, and provide assistance with the verification and appeals process. 

Under her leadership at Lindblom Math & Science Academy, Lindsay has assisted thousands of families to plan for college, earning her school #1 ranking in scholarship dollars awarded and for college persistence.  She has had major articles published in Professional School Counselor, the flagship journal of the American Student Counselor Association, LINK for Counselors, Smart Social, Accredited Online Colleges, U.S. News, and other publications.

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