The U.S. Education Department (ED) is the lender to which you owe what you borrowed under the Federal Direct Loan Program (FDLP). But ED doesn’t collect payments, answer questions, or provide help related to your FDLP debts. It’s contracted those jobs to one of nine private companies called a “loan servicer,” something many lenders do for their student and other consumer loans.
Loan servicers are usually very helpful. However, in one year alone there were over 30,000 documented complaints about them denying or discouraging the use of loan deferments, forgiveness, and repayment plans to which borrowers were entitled; inappropriately charging late-payment fees or increasing interest rates; losing or misapplying loan payments; and otherwise doing injustices to student loan borrowers.
If your servicer messes you over, here’s what you should do:
- Go to ED’s Federal Student Aid website and review the applicable section under “How to Repay Your Loans” to make sure you understand your rights and responsibilities as a federal loan borrower.
- Call your servicer for help in resolving the problem. If necessary, speak with someone in management. Keep detailed notes — date, time, names, what you said, what they said, etc.
- Problem not resolved? Submit a complaint containing all the notes described above to your U.S. Reprentative or Senator and ask them to investigate your issue. This used to be something you could do through the Consumer Finance Protection Bureau (CFPB), but on May 9, 2018, the Trump administration’s CFPB director shut down its division that investigated such complaints.
And if you ever are mistreated by a federal student loan servicer, be aggressive in standing up for yourself and seeking relief. It’s your right, not just as a borrower, but as a citizen!
This is College Affordability Solutions’ last regularly scheduled blog for the 2016-17 academic year. But we’ll start up again in early August with more strategies to be used before, during, and after college for helping to optimize higher education affordability. Have a great summer. We’ll be back soon!