3 Red Flags to Watch Out for with your Student Loan Servicer!
Federal Loan Servicers like Navient, ACS Servicing, PHEAA, and Nelnet have received many complaints, some of which lead to lawsuits for misleading clients into accumulating more debt (in the form of capitalized interest) when their clients could’ve qualified for income-based repayment with Student Loan Forgiveness. Before you make any decision on your student loans, go over these common red flags and find out if your loan servicer is doing their job:
1) Forbearance- Forget it!
If you’re having a tough time making your monthly payment on a standard plan, you can change your federal loans to A) an affordable repayment program with Student Loan Forgiveness or B) put your loans on forbearance- a temporary Band-Aid.
Forbearance is a temporary hold on your loans limited to a maximum of 12 months each time you apply and only if you’re approved. It should be used for emergencies and extreme cases of financial hardship. Why? Because it’s capped on certain types of loans! You never know when it can come in handy so it’s important not to use it unless you absolutely need to.
Despite its purpose, some loan servicers have incorrectly advised borrowers to put their loans on forbearance, instead of helping their clients qualify for a forgiveness program based on income.
In a lawsuit against Navient, a national loan servicer, the Consumer Financial Protection Bureau (CFPB) stated they added “$4 billion in interest charges to the principal balances of borrowers who were enrolled in multiple, consecutive forbearances”. In another case, the State of Massachusetts sued ACS Servicing for $2.4 million for delaying [income-driven] applications.
During a forbearance period, your loans continue to accrue interest which means a larger debt to pay off in the long haul. Your most cost-effective option is to begin your payments through a forgiveness program where some (if not all) of the interest is eventually waived. In many cases, part of the principal balance is also forgiven.
2) Check in Every Year or Check Out Forever!
Enrolling in Student Loan Forgiveness and paying off only a small portion of your debt is obviously the best repayment option. But most people who qualify aren’t told about the most important detail about student loan forgiveness: annual recertification. Every year, you must resubmit your paperwork for your monthly payments to qualify towards forgiveness. If your loan servicer fails to remind you about your renewal, you’ll automatically bounce back onto the expensive standard plan.
In a report by the CFPB, Navient’s “annual renewal notice sent to borrowers failed to adequately inform them of critical deadlines or the consequences if they failed to act”.
As part of our services here at My Education Solutions, we provide a renewal support staff to process renewals and answer all renewal-related inquires. Our processing department ensures clients are notified a month prior to their renewal due date and continue to follow-up through emails, texts, and periodic phone calls to ensure they submit necessary documents on-time to prevent any gaps in the program.
3) Poor Customer Service
Who wants to wait on hold for an hour to talk to a live human? Better yet, who wants to get harassed with robocalls 80 times a day for your student loan payment…without your permission?
In a class action lawsuit against Navient, William L., along with many other Navient clients were illegally contacted with automated messages soliciting payment. According to the Telephone Consumer Protection Act (TCPA), unwanted solicitation through technology can merit a lawsuit!
At My Education Solutions, we adhere to the guidelines provided by the Telephone Consumer Protection Act. We’ll only contact you if you tell us you want to learn about Student Loan Forgiveness or are due for your annual re-certification.
Scavenging for the best option for your student loan debt can lead you down a path of no forgiveness and that’s why it’s important to know your loan servicer! Out of 33 million borrowers who qualify for Public Service Loan Forgiveness, only a handful take advantage of the benefits due to misleading advice!
As a consumer advocacy organization, we’ve chosen to specialize in one area: forgiveness programs. We don’t own loans and we don’t solicit, we simply administer them for you, so you don’t have to!
By: Genesis Moreno
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