Student loans are a source of discomfort for many Americans. They’re worth it—which the evidence backs up—but the cost can feel too high for some.
According to the Federal Reserve’s recent report, the average debt for student loans is $36,299. 52 percent of borrowers under the age of 25 report that someone else is assisting them. If you’ve been following our blog, you might remember this oddball statistic—our grandparents are coming to the rescue in a big way.
However, as the cliche goes—something’s rotten in the state of Denmark. Or so a recent lawsuit argues. Unlike the $5 billion that vanished from a private student loan owner, the latest hiccup in the student loan world revolves around a lawsuit. Pennsylvania’s attorney general, Josh Shapiro, sued Navient Corp. just this past October in a case that could have a ripple effect for anyone with student loans. The suit alleges:
Shapiro sued Navient in federal court alleging a raft of illegal conduct, most notably that it “willfully” and “knowingly” cheated struggling debtors who face long-term hardship by steering them into payment plans that postponed bills, allowing interest to accumulate, rather than helping them enroll in plans pegged to income. Such earnings-based plans offer the possibility of debt forgiveness after years of steady payment. Postponing bills promises higher payments down the line.
Even more alarming are the potential violations from Navient’s customer service team.
The state of Illinois lawsuit claims that Navient for years promised higher pay to its customer service representatives to rush borrowers off the phone. One former, unnamed employee is quoted saying that bonuses were paid for calls that lasted less than six minutes. A review of call recordings by investigators showed that plans that postponed payments were frequently mentioned in the first six minutes of the typical call. Half the time, Navient employees didn’t bother to mention income-based repayment plans.
Navient is one of the largest student loan servicers there is. So there’s a good chance you could be affected. What should you do?
Til’ Death Do Us Part: Your Student Loan Servicer is Your Student Loan Servicer
Whether you like it or not, you are assigned your student loan servicer. The US Department of Education is responsible for this if you take out a federal loan. If it’s a private loan, that job goes to your lender. The lesson? You can switch student loan servicers, but only in theory.
You have the option to accomplish this by refinancing, or federal consolidation, but getting a better servicer is not a guarantee, and you open yourself to new problems making the transition.
The best you can do is file a complaint with the Consumer Financial Protection Bureau, Department of Education, or your student loan servicer. There’s only a handful of student loan servicers, so there’s a good chance you’ll recognize one of the following names:
FedLoan Servicing (1-800-699-2908)
Great Lakes (1-800-236-4300)
Granite State (1-888-556-0022)
OSLA Servicing (1-866-264-9762)
Know Your Enemy by Knowing Your Repayment Plans
If you’ve ever talked to a student loan servicer, time them. If you’re off the phone in under six minutes, then they’ve done their job and you’ve failed to do yours—at least if we’re being extremely cynical. But sometimes it pays to be a little paranoid. When it comes to repayment plans, you have some different options.
Income-driven repayment plan: which caps your student loan payment by calculating a percentage of your income.
Student loan forgiveness program: can provide pure debt relief if you work for a certain type of employer.
Federal consolidation: a qualification for whether you can qualify for the above plans.
Student loan refinancing: can save money on the interest for your student loans.
Check Your Credit Report
One of the key findings in the lawsuit is that Navient did not handle payments correctly, and they obscured their renewal deadlines.
For at least three years, Navient’s renewal notices did not mention the actual date by which the application was due, and the warnings it sent were often vague. For several years, the notices sent by email had the subject lines, “Your Sallie Mae Information” or “New Document Ready to View.”
If you know for a fact that you’ve received loan relief, or haven’t been late on payments, now’s a critical time to check your credit report. If these allegations are to be believed, then it’s possible your credit score has taken a hit without you knowing. We don’t normally believe in shameless plugs but here at the Credit Repairmen, our free credit evaluations walk you through exactly how your credit reports work, and what you can do in situations where your credit score is unfairly holding you back.
For a FREE credit evaluation to enroll in a program that gets good credit to help pay for bad loans, contact us by visiting us at our committed offices at 6989 Alamo Downs Pkwy, San Antonio, TX 78238, or call us at 210-520-0444. For teachers interested in credit repair, don’t forget our special!