The lawsuit filed last week against Navient, the largest student loan servicer in the country, hit home with many student loan borrowers who say they have had similar experiences.
Lost paperwork. Misapplied payments. Surprise late fees. Processing delays. Overall confusion.
(You can read more about the allegations made by the Consumer Financial Protection Bureau (CFPB) and Navient’s response).
As a follow up to “What The Navient Lawsuit Means For Your Student Loans,” here are some more action steps that you can take to protect your interests and take control of your student loans:
1. Always communicate in writing
How many times have you called your student loan servicer and been assured that your request was processed, only to find out later that this was not the case? Not only is it frustrating, but it is also may be difficult to dispute later — particularly if your student loan servicer’s error resulted in a late fee or some other expensive miscalculation. While calling your student loan servicer may be convenient, make sure to put all correspondence in writing. This includes formal requests, payment instructions and any other material issues related to your student loans. When you keep an organized paper trail of your correspondence, you will have all supporting documents in one place in case of any issues.
2. Sign up for automatic payments
Enrolling in automatic payments is a must-do for any student loan borrower. In many cases, you may be eligible for a 0.25% interest rate deduction when you enroll in automatic payments. This will also help ensure that your student loan payment reaches your student loan servicer on time each month. Do not rely on sending a paper check via regular mail because there is no guarantee that your check will arrive on time or at all. There are two primary ways to enroll in automatic payments: one is with your bank and the other is with your student loan servicer’s online platform. The preferred method is to enroll directly with your student loan servicer’s online platform so that you can create a direct paper trail in case of any dispute. Plus, free bill pay at some banks is sent via paper check (rather than electronically through ACH), which can lead to further delay.
Enrolling in autopayments will be particularly important if your student loan servicer changes during the course of your student loan (which you should expect to occur at least once). When your student loan servicer changes, make sure to update your automatic payment information to your new student loan servicer (and stop automatic payments for your previous student loan servicer).
3. Monitor your credit score
As a student loan borrower, your outstanding debt and your ability to make on-time monthly payments impact your credit score. Therefore, it is essential that you regularly monitor your credit score and credit reports for errors. There are three major credit bureaus: Experian, Equifax and Transunion. You can request a copy of your credit report from each lender, or check AnnualCreditReport.com.
To access your credit score for free on an ongoing basis, Make Lemonade recommends that you use Credit Karma, which you can download to your phone or access online.
Don’t rely on your student loan servicer to make sure your student loan payments are reported accurately to the credit bureaus. Expect that your student loan servicer will make multiple mistakes throughout the life of your student loan. Therefore, it is incumbent upon you to be vigilant and pro-active to spot any mistakes as soon as they happen so you can correct them. You’re right – this shouldn’t be your responsibility to have to double-check your student loan servicer. Unfortunately, it is a feature of the imperfect student loan system. However, you will save time and avoid stress by monitoring your credit reports regularly to ensure accuracy.
4. Contact the U.S. Department of Education
If you feel that you are being treated unfairly by your student loan servicer, or you otherwise want to file a formal complaint regarding your federal student loans (e.g., Stafford, Direct, PLUS, Perkins), you can contact the U.S. Department of Education through the Office of Federal Student Aid. You can expect to hear back from the U.S. Department of Education within 15 days and be provided with a resolution within 60 days.
5. Contact the Consumer Financial Protection Bureau
If you want to file a formal complaint regarding your private student loan (e.g., issued by a bank, credit union or school) or your federal loan servicer, contact the Consumer Financial Protection Bureau. The CFPB is charged with supervising financial services companies and enforcing federal consumer financial laws. Once you submit a complaint to the CFPB, the CFPB will forward your complaint to the student loan company or servicer, which will have 15 days to respond regarding your complaint and the proposed steps that will be taken to resolve your complaint. Once you receive the company’s response, you have 60 days to provide feedback.
6. Understand all your student loan options
One role of your student loan servicer is to help you understand your available options with regard to your student loans. However, don’t rely solely on your student loan servicer to provide you with all the facts. Do your homework, invest the time and get informed. Your financial situation is unique, and therefore you need to find the option that is in your personal best interest. Don’t let your student loan servicer steer you toward a short-term option when you should choose the long-term solution.
Make Lemonade can help you learn more about these various options:
- Student Loan Refinancing
- Federal Student Loan Consolidation
- Income-Driven Repayment Plans
- Student Loan Forgiveness