Home > Students > How to Stand Up to Your Student Loan Servicer

Comments 0 Comments

Perhaps there’s a bit of irony in the name “student loan servicer,” considering the number of stories out there about the less-than-satisfactory customer service they provide. The Consumer Financial Protection Bureau started collecting complaints about student loan servicers in March 2012, and the most recent annual report from the CFPB said the bureau had fielded 3,800 complaints about private loan servicers between October 2012 and September 2013.

Borrowers mentioned frustrations when seeking customer service and complained that miscommunication sometimes resulted in costly errors, like missed or mis-processed payments. Not only can such issues make the borrower pay more out of pocket, they can also affect people’s credit scores, since payment history is the most important part of your credit profile.

An Indianapolis woman recently experienced these frustrations firsthand. Chris Boehm, a doctor of veterinary medicine, is six years into repaying about $138,000 in loans for four years of vet school, and she never encountered problems until October. That’s when her loan was sold from one student loan servicer to another.

Following a saga that spanned five months and involved an accidental double payment, a missed payment, forbearance and a huge jump in monthly payments, Boehm can happily say her problems were solved. It’s a refreshing story among the thousands without happy endings. (Just before her issue was resolved, Boehm was ready to file a complaint with the CFPB.)

While consumers may find comfort in the CFPB’s mandate to improve student loan servicers, the best advocates borrowers have at their disposal right now are themselves. Boehm and her husband dedicated time to calling customer service representatives and documenting loan payment activity so she could prove her case: that error after error had hit her account, and it was not her fault.

Pay Attention to Details

It all started when her new servicer, Nelnet, debited her account twice for October’s payment — the first time this had happened with the new company. When the loan was sold, she had set up automatic payments, but as soon as she saw the double charge, she called customer service. A representative told her she could leave it and pay twice, but at $714 a month, it wasn’t in the budget. She had to fill out some paperwork to reverse the second payment.

What they didn’t tell her: The reversal shut off her automatic payments. (The servicer told Boehm that she should have seen a notice about the payment cancellation when she reversed the second October charge, but she didn’t see it, nor could she find it online after the fact.) The November due date came, and the payment didn’t hit her bank account, but she was paying attention and went on to take care of the bill immediately. She also set up the automatic payment again.

“Thank God I printed the receipt for that,” she said. When she made her request to set up the auto-debit system, the site displayed a timestamp, and she printed it. December rolled around, and again, no auto-debit occurred. She didn’t notice as quickly this time but went online to pay the loan late.

Document Everything

Next, Boehm found out her loan went into forbearance, pushing her next payment to February. This was in December, and at this point she had started printing every bit of information that popped up when trying to manage her loan. Even while payments are suspended due to forbearance, the loan accrues interest, and Boehm saw her monthly payment jump $50. About $300 in capitalized interest was added to her balance because of the forbearance (meaning she would then have to pay interest on that interest), but Boehm said it just didn’t make sense.

“We ran it through an amortization program, and it should have only cost $3 or $4 a month, not $50,” Boehm said. “That $300 mistake was worth like $12,000 over the life of the loan.”

She called customer service again, and a representative explained that’s just the way it was, but she could write a letter to the correspondence department. In that letter, she cited the company’s mission, vision and core values (“Customers are #1” and “We strive to provide consistent, clear support for all of our customers.”), and specifically outlined her requests:

  • I do not want the interest added to my principal
  • I want the forbearance erased from my account
  • I want my payments to go back to where they were
  • I want the auto-debit to work

She sent the letter Jan. 13, along with documentation of her transactions and account activity. By Jan. 21, the extra interest was removed. Boehm’s February payment came out just fine — at least five phone calls, a letter and four payment periods after her first attempt.

“If you have your documentation to show the payments you made or the notes of what was agreed to, that’s going to go a long way to helping you fix the problem,” said Gerri Detweiler, Credit.com’s director of consumer education. “The other thing to keep in mind is if this mistake has damaged your credit, and they won’t fix it, you may have a basis from a credit damage lawsuit.”

Boehm said she hasn’t encountered credit issues, but Detweiler makes an important point: If late payments are reported to a credit bureau, it will hurt your credit scores, which heavily factor in payment history.

Don’t Let the Lenders Get You Down

Interestingly enough, Nelnet receives pretty decent customer service reviews. In the most recent review of the largest student loan servicers conducted by the CFPB, Nelnet was the second-highest borrower-rated servicer (Great Lakes was first, FedLoan Servicing third and Sallie Mae fourth).

“When someone doesn’t have the experience that we hope to live up to, we’re disappointed,” said Ben Kiser, a spokesman for Nelnet, which serves more than 6 million borrowers. “We’re very happy that it was resolved.”

Boehm’s success story speaks to some of the most common complaints borrowers have with student loan servicers — payment problems and poor customer service. Luckily for Boehm, she was able to clearly state her case and said that even though it took time and effort to get the error fixed, she dealt with some nice representatives later in the process.

“The young lady who called me was really apologetic,” Boehm said. “That felt really nice. I felt like I was banging my head against the wall every time I called.”

Overall, however, the most frustrating part of the process for Boehm wasn’t necessarily the service. It was the fact that she had no control over who she worked with, since student loan borrowers can’t choose their servicer. And the Boehms have never run into issues with loans, making the whole thing seem that much more unreasonable. With eight mortgages (they’ve moved a lot), a student loan in repayment and a home equity line of credit in her credit history, she was surprised at how frustrating the process was.

“It’s kind of crazy,” she said. “If someone is treating you poorly you should be able to choose your loan servicer.”

Alas, that’s not the case. While the CFPB continues to watch servicer activity, it’s up to you to defend yourself.

More on Student Loans:

Feb. 18, 2014: This story was updated to add a comment from Nelnet, the student loan servicer.

Image: Michele Piacquadio

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team