3 Steps to Handle Being Mistreated by a Student Loan Servicer

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Updated on Tuesday, November 11, 2014

mortar board cash

A college diploma no longer promises a guaranteed path to success. A harsh reality that hits after the excitement of finally completing college dwindles down and the pressure to find a good paying job sets in. Deciding on whether or not you should embark on an extended vacation after four grueling years of study should be a no brainer, but the reality of student loan repayment quickly extinguishes any thoughts of lying on a beach.

Borrowers know that time is of the essence. The six-month grace period post-graduation is crucial in building a solid financial future. However, some borrowers aren’t able to find a job within that six-month time span, and if they do, their entry-level pay may barely cover living expenses. The last thing borrowers need in times of financial hardship is maltreatment by their student loan servicer. In fact, servicers are required by law to work with struggling borrowers, yet some do the complete opposite.

The alarming part of all this is that a majority of borrowers aren’t even aware of the fact that they’re being mistreated. In fact, in the midst of supervising for compliance with federal consumer financial laws, the Consumer Financial Protection Bureau (CFPB) found that one or more student loan servicers were:

  • Allocating payments to maximize late fees
  • Misrepresenting minimum payments
  • Charging illegal late fees
  • Failing to provide accurate tax information
  • Misleading consumers about bankruptcy protections
  • And abusing the ever-popular debt collection calls to consumers at illegal times.

If you believe that you’re a victim of mistreatment by your student loan servicer then you’ve already started the three-step process.

Step 1: Identify problems

You have successfully identified your issue and are ready to start the resolution process.

Step 2: Gather relevant evidence

Just saying that you have an issue isn’t enough; you need relevant proof to support your claims. Relevant evidence includes:

  • Promissory Notes that outline the any agreements made between you and your loan servicer
  • Bills
  • Canceled checks
  • Correspondence between you on your loan servicer via phone, email or snail mail

Step 3: Make Contact

Now that you’ve identified your problem and gathered relevant evidence to support your case, you can now contact your loan servicer. If you’re not sure who your loan servicer is, you can find out at http://www.nslds.ed.gov. Prior to making contact with your servicer keep the following tips in mind:

  • Take detailed notes of all conversations and be sure to follow up in writing so there is a physical record of what has been said and done.
  • Request a copy of your customer service history. Some loan servicers make available copies of the notes that customer service representatives make on their accounts.
  • When you speak with someone on the phone, take down the representative’s name, when the call took place, and what was said.
  • Save the originals of all receipts, bills, letters, and e-mails regarding your account. Be sure to provide copies of the originals if you are asked for them. Send letters via certified mail, with return receipt requested.
  • No matter how frustrating the situation, always be polite and courteous.
  • Request for a response at a reasonable times, and be sure to tell the customer service representative how you can be reached.

Problem not solved?

To be sure that you’ve done everything in your power to resolve your student loan problem take this self-resolution test.

For Federal Student loans: If after completing the self-resolution test you find that you are in need of further assistance, contact the Federal Student Aid Ombudsman Group to request a consultation. They will collect information about your case and offer assistance in identifying a suitable resolution.

For Private Student Loans: The Consumer Financial Protection Bureau recently started accepting student loan complaints. They will forward your issue to the company, provide you with a tracking number and keep you updated on the status of your complaint.

Need more help?

Although there is little recourse for private student loan issues, you can still get help with federal student loans through the Federal Student Aid’s Myeddebt.com. Through this portal, you can get information on how much you owe on your defaulted federal student loans, your payment history, and options for resolving your issues. You can also access forms to request a hearing, review, or discharge of your debt, as well as forms to submit a complaint.

Ignoring your own debt won’t make it go away, so do yourself a favor and seek help as soon as possible.

newsletter-1Want regular updates about the best financial products available? Then sign up for our Price Checker Newsletter. Twice a month, we’ll deliver the best-of-the-best right to your inbox.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Do you have a question?