Things are getting even more chaotic than you might expect when it comes to paying back student loans after the three-year pause involving the pandemic, and a federal administration’s efforts to relieve debt for the new generation.
To get a front-row seat, you can check out reports like this one from September 11 at NPR, where writer Cory Turner points out that the loan servicers are trying to help 40 million borrowers get set up at the same time. They are waving the white flags, signaling Mayday, but how much of it is imposed by the situation itself, and how much of it is negligence on the part of the lenders?
We know that many lenders are withholding information, misreporting information, or failing to track student loans accurately.
But there is another big problem, and it comes with music.
Borrowers are finding that they’re spending inordinate ridiculous amounts of time on hold on the telephone, in order to get even basic information.
Turner points out that the Consumer Financial Protection Bureau is tracking how many borrowers are able to get through on the phone, versus how many give up. Those numbers aren’t immediately visible, but officials are finding that the problem is significant.
Meanwhile, Mattew Frankel at Motley Fool points out that borrowers are dealing with quite a lot of miscalculations by lenders and loan servicers – some 420,000 accounts, he suggests, are being misreported on the lender side.
“There have been other errors as well,” Frankel writes. “Large loan servicer MOHELA made (and quickly corrected) an error by using the 2022 federal poverty guidelines to calculate borrowers’ payments. Borrowers in other income-driven plans have seen incorrect payment information, due to incorrect family size or marital status information.”
Many of those mistakes are in some way related to a 12 month on-ramp program set up by the Biden administration to ease the jolt of getting reintegrated back into the repayment process…
The On-Ramp
How many borrowers are using the on-ramp? That information is hard to come by, partly because of a lack of robust reporting. What we do know is that borrowers are reporting when they want to get on the on-ramp, they may be unable to, again, because of lenders not having the right information and/or not communicating with them.
If you can’t get your lender on the phone, what can you do?
Straight From Reddit
You can also find real-life stories of borrowers who have spent hours on hold:
“Good luck getting these people to actually answer a phone call,” writes Purranha418 on a thread with more than a few frustrated borrowers dealing with the likes of Aidvantage, a major loan handler. “I’ve been on hold for (checks phone)…45 minutes now. I’m waiting for the call to disconnect anytime now, just like the last 4 times I’ve called. High call volume,…Do they only have one person working or something? I am trying to change the amount I have debited each month because my employer makes part of the payment directly to them, for me (nice benefit , BTW) except I can’t get anyone to answer me to change that. They are happy to continue debiting my account for the whole payment however. I am fine with making a loan payment, but I’ll be danged if I give them extra. If you call, you will sit on hold until heck freezes over.”
I have been trying to call AidVantage for the past few days and they do not answer!!” writes user bel_mar. “I called yesterday and today at different times (daytime and evening) and I have not gotten through. First call was on hold for 48 minutes and second call 1 hour and 18 minutes and no answer (after an hour, the hold music stopped, it rang and sounded like a representative would answer, and then it went silent! But didn’t hang up). So annoyed with this!!! I sent an email through their website but there’s no tracking or confirmation number. I also sent a message to StudentAid.gov and did receive an automatic reply saying they’ll respond to my case within 15 days.”
News from the National Credit Union Administration
Earlier this month, the NCUA put out a memo on the resumption of payments and the impact on student loan borrowers, estimating that 43 million borrowers have a collective $1.6 trillion in debt, or around $40,000 per borrower, stating:
“Inflation and elevated interest rates have strained the budgets of many credit union members – for many borrowers the resumption of federal student loan payments represents an immediate and in some cases substantial payment stress due to the increase in their total monthly repayment requirements.”
Later in the memo, the agency suggests credit unions should conduct risk assessment, borrower outreach and portfolio monitoring in order to stay up on what’s happening. The notice concludes:
“The NCUA encourages credit unions to work constructively with impacted borrowers and will not criticize a credit union’s efforts to provide prudent relief to borrowers when such efforts are conducted in a reasonable manner with proper controls and management oversight and consistent with consumer financial protection requirements.”
It’s laudable that the NCUA wants to provide relief to borrowers!
By their very nature, the lenders and loan servicers really don’t want to do that, because their interest is in collecting as much money as possible. So how do we know how much of their inattention, negligence or misinformation is caused by excessive workloads and how much is willful?
Well, we really don’t. As a borrower, you can keep your eye on the CFPB and on this blog to understand more about your rights – for instance, the on-ramp program means you can delay payments for another 12 months and only accrue interest. But many borrowers don’t know that, and so they keep getting harassed by lenders and loan services for the full amounts.
Don’t put up with the runaround! Know your rights as a borrower. That’s the only way to keep the lenders honest, and upholding their real responsibilities in a fraught economy.
