The Problem
Sometimes, part of the challenge that student loan borrowers face is the difference between the ideal and the reality, especially concerning their first point of contact, the loan servicer.
Take, for instance, the revered Nerdwallet piece often cited as the go-to authority on student loan processes. Positioned at the top of the list of Google searches, it offers some genuinely helpful insights. Yet, one of its key points may not be universally beneficial to all borrowers.
When Your First Point of Contact Doesn’t Work
Writers Anna Helhoski and Eliza Haverstock suggest that you should start with your student loan servicer:
“The federal government and many private lenders assign each borrower a student loan servicer. Your servicer should be your first point of contact for student loan help. You can find your federal student loan servicer by logging into your My Federal Student Aid account. For private loans, ask the original lender whom to contact for billing or repayment inquiries.”
That’s all well and good, but in reality, many borrowers find that the loan servicers are not making good-faith efforts to communicate with them!
In that case, the idea of starting with your loan servicer puts you back to square one….
This creates all kinds of unnecessary borrower frustrations that boil over into how the industry as a whole is perceived.
Loan Servicer Communication Problems Explained
Online, you can find many stories where people began dealing with their loan servicers and faced problems right from the start. Here are some examples of loan servicer communications problems:
A frustrated Redditor recounts Mohela’s initial correct processing, followed by an erroneous handling of an earlier application. Despite over 8 hours of calls, no resolution was found beyond a verbal recertification, potentially placing them back on forbearance. Despite multiple requests, MOHELA neglected online correspondence and failed to provide a written or electronic explanation for the interest waiver
Here’s an interesting take from a team at USA Today, describing some of the chaos that has ensued this fall.
“One borrower got a bill for more than $108,000 – their entire balance, all due at once, according to Education Department records. Others spent an hour on hold trying to reach the company managing their loans and only about half who called could get through to talk to anyone. Some 2.5 million borrowers either didn’t get their bills with much notice or never got a bill at all. Some student loan borrowers whose balances were forgiven long ago were billed anyway.”
Additionally, industry analysts are more bullish on the ability of loan servicers to get things done, arguing that “99.9% of the time,” a problem can be easily fixed, but that analysis doesn’t factor in all of those times that the lenders or loan servicers are simply dishonest, or negligent.
In these cases, they won’t even try to play ball. They will misapply paid amounts, mislabel loan statuses, and staunchly refuse to apply the correct information that the borrower is providing. And there you have quite a real problem!
The Limitations and Alternative Solutions
Now, the Nerdwallet and other articles do concede that you may run into problems, showing that the people who are giving the advice understand that you may not get anywhere with that original first point of contact. In some cases, it’s more like a plan to cover all bases before moving to the next step, which is to contact offices like the CFPB, and get legal counsel to put pressure on the lender.
Conclusion
In so many cases, the lenders will simply ignore borrowers until they get a lawyer. But in many cases, they will not ignore the opposing counsel, because they will face the threat of legal action held up against them.
Sadly, it has to come to that, but in looking fairly at the student loan industry, most of us agree that there is a lot of refusal to cover the basics when it comes to accommodating borrowers fairly. Every borrower deserves accurate information and fair play!
Keep an eye on the blog as we continue to advocate for those burdened with student loans!
