Dealing with your student loan servicer – the company that collects and applies your student loan payments, arranges payment plans and reports your payment history to the credit bureaus – can be frustrating, especially since you typically don’t chose which one you work with. The Dept. of Education outsources all federal student loan servicing tasks to these companies, and many private lenders do the same for their loans.  Borrowers enjoy dealing with these middlemen about as much as they would enjoy a steaming bowl of pureed tripe with ketchup.

In 2017, the U.S. government’s Consumer Financial Protection Bureau forwarded 17,300 borrower complaints to student loan companies for response. Of those complaints, 71% related to servicing. And as of April 25, 2018, the CFPB has forwarded another 2,841 servicing complaints, which is about on pace with 2017. (See The Worst Student Loan Servicers Going into 2018.)

Borrowers’ Problems with Student Loan Servicers

The biggest loan servicing complaints pertain to payment handling, loan misinformation and loan fees.  Other common problems include misapplication of extra payments meant to reduce principal; difficulty enrolling in payment plans and deferral programs; failure to enroll the borrower in a loan forgiveness program; and inaccurate student loan information appearing on credit reports.

“Complaints generally occur when borrowers feel as though they are being taken advantage of,” says Elaine Griffin, a senior contributor and communications specialist at Edvisors®, a company that provides free advice and creative ways for students and their parents to pay for college.

Better communication would pave the way to fewer complaints. “The terms and conditions between loans may vary, making it extremely difficult for borrowers to keep track,” says Griffin, who has been working in higher education finance for 10 years, including 7 years with the U.S. Dept. of Education’s office of Federal Student Aid.

Even though lenders provide terms and conditions to borrowers, borrowers don’t always understand the details, or how different decisions they make about their loans will affect them. And many borrowers have multiple student loans. That means multiple servicers – and payments to multiple companies. Different loans may have different repayment options.

Furthermore, any of your student loans could be sold at any time, resulting in a change of servicers – and with it, a change in whom you’re dealing with and where you send your payments. This change also introduces the possibility for errors in servicing your loans. The transition should be as seamless as a pass from LeBron James. But sometimes it’s more like learning to drive a stick shift.

If you’ve experienced problems with your student loan servicer, here are the steps you should take to resolve them. (For related reading, see: Do You Really Have Student Loan Forgiveness?)

How to Identify the Problem and Gather the Facts

Let’s say you’re looking at your latest statement or reviewing your credit report and you see something that looks wrong or that you can’t make sense of. Your first step should be to figure out what, exactly, is confusing or incorrect. Sometimes that’s immediately obvious; other times you just have a feeling that something isn’t right, but you’re not sure what’s going on. Maybe you don’t understand how your payment was allocated between interest and principal or why your credit report shows that your student loan balance is higher than the amount on your statement.

Organize your thoughts. Talk it out with a friend or family member, and write down what you’re seeing and what seems incorrect. Also write down the questions you’d like to ask your servicer that might help you understand the issue. Then, arrange what you’ve written down in a logical order, providing background first (for the customer service agent), then moving on to your questions, which should be broken down to make them as simple as possible.

Researching your problem before you contact your servicer may help you understand what’s going on and determine the best questions to ask. The websites of two experts we spoke with for this article, and, are good places to start, as is the student loan section of the Consumer Financial Protection Bureau website.

Robb Granado, chief operating officer of CommonBond, an innovative private student lender, recommends bringing as much information as you can to the conversation.

“Let’s say, for example, that you sent a check to your servicer and it hasn’t been applied to your account after several weeks,” Granado says. “It's likely the servicer has received and cashed the check, but the person you are going to speak with on the phone may not easily have access to that information. If you have the details of that payment readily available, such as the check amount or date cashed, it will help the agent assist you even faster.”

Before making contact, also gather copies of canceled checks, bank statements, student loan statements, screenshots from your online account, payment confirmations, and anything else related to your issue to help prove your position and give the customer service agent all the details he or she might need to help you. (For information on how much we are borrowing, see: American Debt: Student Loan Balances Up $21 Billion in 4Q 2017.)

Avoiding Mistakes When Contacting Your Servicer

Once you’re fully prepared, either email or call your servicer using the script you’ve created to make sure all your preliminary questions get answered.

If you contact your servicer by email, make sure to save a copy of the email you send (for example, copy and paste the information you submit via the servicer’s online form and note the date and time you submitted it). When you receive a response, save a copy of it. You should expect to get a response within 15 days.

Griffin says there are times when you might want to try calling instead of chatting online or sending an email. “If it’s your first time contacting your servicer, and your problem is complex, you may have a hard time explaining it through written communication,” she says. “It’s best to set aside the time to have the phone conversation, even if it means you have to wait on hold to speak to a customer service representative.”

Andrew Josuweit, CEO and founder of Student Loan Hero, a site that helps borrowers understand and manage their student loans, once had 16 different student loans totaling $74,000 and managed by four different servicers. He says one of the biggest mistakes he sees borrowers make when dealing with servicers is not taking diligent notes.

Communicating with your loan servicer over issues with your loan can get complicated, so it’s important to take down the customer service representative’s name, the time and date of the call, and what you discussed and agreed upon,” Josuweit says. “That information can help you significantly if the loan servicer doesn’t follow through on what they agreed to do.”

Be polite, stick to the facts and don’t let your emotions take over. The customer service agent addressing your problem is unlikely to be the person who caused your problem, so don’t give them an earful. You need this person to be your ally in getting your problem solved.

If the person you speak with can’t help you, Griffin says, you should ask to escalate the issue to a supervisor or account resolution specialist.

And if you can’t resolve the issue after multiple conversations with your servicer, Griffin recommends submitting a formal email documenting the steps you have taken to resolve the issue, including when you called or emailed previously and what you discussed. Then, ask the servicer to address your outstanding questions and concerns.

Granado offers an additional tip on how to make the process less frustrating and more productive.

“One way to help interactions with servicers is to reach out before an issue is urgent,” he says. “It can take longer than a customer would anticipate to make certain updates or research and rectify problems, so reaching out as early as possible can help alleviate the stress of the situation.” (See The Biggest Financial Hurdles Young People Face.)

Enlisting Outside Help for Student Loan Servicing Problems

After you’ve done everything you can on your own to resolve the problem, if it’s still not fixed, you can seek outside help. These entities won’t work with you if you haven’t already made a reasonable attempt to solve the issue on your own, and they will ask for documentation of your previous communications (another reason to remain calm and factual and not write or say anything embarrassing when interacting with your servicer). Here are three places to turn to for help.

Using the Federal Student Aid Feedback System

The Dept. of Education’s Federal Student Aid Feedback System, introduced in 2016, lets borrowers submit their student loan experiences (positive or negative), send suggestions and report complaints, suspicious activity or possible scams to the federal government. If you have a federal student loan (more on private student loans in a moment), you can file a complaint online, by phone or by mail.

According to the 2017 Federal Student Aid Feedback System Annual Report, the FSA office received 14,455 complaints about federal student aid between July 1, 2016, and June 30, 2017.  About 26% (3,742) of those complaints related to student loan servicing.  PHEAA, the company that services about 25% of federal student loans, received about 38% of the complaints.  Great Lakes Educational Loan Services received just 9% of the complaints despite servicing the largest percentage of loans (27%). (Great Lakes has since been acquired by another major servicer, NelNet.)  The biggest categories of servicing complaints related to loan repayment plans; loan discharge, cancellation or forgiveness; loan accuracy; and public service loan forgiveness.  (See Do You Really Have Public Service Loan Forgiveness?)

Contacting the Federal Student Loan Ombudsman

Another option if your problem relates to federal student loans is to contact the Federal Student Aid Ombudsman Group, part of the U.S. Dept. of Education. This entity’s job is to act as a neutral liaison between you and your servicer – not as a consumer advocate. You can submit your complaint securely online or by phone, mail or fax.

“When you reach out to the ombudsman, they will ask for any and all documentation about your loans, including notes on any calls or email correspondence you had,” Josuweit says.

If you have a problem with a federal student loan, how do you decide whether to contact the FSA or the federal ombudsman?

“It’s really up to the borrower,” Griffin explains. “Both the FSA complaint system and the U.S. Department of Education’s student loan ombudsman are part of the office of Federal Student Aid. They both work closely together and will make sure the case is referred to the appropriate area for resolution.”

Reaching Out to the Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau’s Student Loan Ombudsman Group, also part of the federal government, can help you with both federal and private student loans.

Here’s a simplified overview of how the CFPB’s complaint process works.

  1. Submit a description of your problem and supporting documentation through the CFPB’s consumer complaint website.
  2. The CFPB will review your complaint and supporting documentation and forward it to your servicer. (If it feels another government agency would be better able to help you, the CFPB will forward your complaint to that agency and inform you about it.)
  3. The servicer will review your complaint, communicate with you about it as needed, and report back to the CFPB about the steps the servicer has taken or will take to resolve the issue. The servicer will usually respond to the CFPB within 15 days.
  4. The CFPB will notify you of the company’s response.

Wondering If It’s Worth the Trouble

You might be asking yourself if submitting a complaint will actually do any good in resolving your individual situation or if your complaint will just go into some gigantic database where it might be useful someday if enough other borrowers submit similar complaints.

Griffin said the FSA Feedback system is, overall, an effective tool for borrowers. The Dept. of Education places a priority on responding because it is overseen by Congress. She points to two reports that have been published on the system’s outcomes. The 2017 report states that the FSA office aims to reply to all customer complaints within 15 days and to resolve them within 60 days, depending on the complexity.

Further, both the FSA and federal ombudsman require an individual evaluation of the issue submitted and require the government to directly contact those who are submitting complaints. Submissions are also maintained in a database to identify larger trends the government needs to address. (See Why the Feds Sued the Biggest Student Loan Lender.)

“Because of the focus on direct contact with people submitting complaints, the use of the FSA Feedback System and contacting the ombudsman are effective methods to resolve issues for federal student loan borrowers,” Griffin said.

The CFPB can assist borrowers in obtaining a response from their servicer, Griffin adds, but since the CFPB does not own the loans, the agency may be limited in its ability to offer a resolution. But since complaints are publicized – while protecting the submitter’s identity – there is an incentive for private student loan servicers to quickly handle issues.

The CFPB also publishes a Consumer Response Annual Report that documents the types of complaints it receives about financial services companies and how those companies handle the complaints. The March 2018 report covering all of 2017 indicates that only 1% of student lenders did not provide a timely response to consumer complaints.  Also, 90% of student loan complaints were closed with explanation – the highest rate of any complaint type.

Note that in an August 2107 letter, the U.S. Dept. of Education terminated the Memoranda of Understanding between it and the CFBP "regarding the sharing of information in connection with oversight of federal student loans," calling the CFPB "an overreaching and unaccountable agency." The purpose of the termination, according to the letter: "to ease the burden for borrowers and to enhance the efficiencies of our servicers." It is not clear how this change will affect help and resolution for those with student-loan issues going forward.

The Bottom Line

You don’t get to choose the student loan servicing company you work with – your lender does. And that can be frustrating, especially if you end up with one that receives a high percentage of complaints and gives you grief.

“We think it’s always best to resolve any issues with the person you speak with on the phone or via email,” Granado says, “but remember that you may have options if you’re not happy with the service you receive. You’re a paying customer, after all. If something doesn’t feel right, speak up.”

It’s worth your effort to get your problem resolved. Not only could it save you money, it could also help other borrowers. Actions related to the 50,700 private and federal student loan complaints the CFPB handled from July 21, 2011 through August 21, 2017 resulted in more than $750 million in refunds to borrowers. When you advocate for yourself, especially through a government agency, you are also advocating for public policy changes and lending industry changes that will improve things for people like you going forward.

(For further reading, see our tutorial, All About Student Loans.)