What to Do If Your Student Loan Servicer Screws You Over – Info Computing

Student loan scams are on the rise, but it’s not just third parties you need to worry about getting the best of you. In many cases, your servicer can mess up payments, stall loan applications or sell of your debt without proper notice.

If any of that happens, you’ll want to be ready. Student Loan Hero has the rundown on what to do if your servicer screws you over.

Your Loans Disappear

If you log into your account to make a payment or check your progress and your balance is suddenly $0, it’s likely not the miracle it appears to be—in fact, it’s a strong indication that your loans have been sold to another servicer. Here’s how to find your missing loans, per SLH:

• Reach out to your student loan servicer to inquire about what happened to your loan.
• Check the National Student Loan Data System to see if it has updated information on your transferred loans.
• Review your free credit reports to see if your old or new servicer reported the transfer to credit bureaus.

Once you do, make sure you stay on them to update your information and accept your on-time payments, or you could be in trouble.

Extra Payments Aren’t Applied to the Principal Balance

As I wrote here, if you’re making extra payments, you need to clarify with your servicer that the money is going toward paying down the principal amount of the loan, as opposed to the interest. This will not only lower your loan amount, it will mean less interest in the long run.

Here’s an example of what to send to the servicer to ensure that they apply any extra payments to the principal, from the Consumer Financial Protection Bureau:

I am writing to provide you instructions on how to apply payments when I send an amount greater than the minimum amount due. Please apply payments as follows:

1. After applying the minimum amount due for each loan, any additional amount should be applied to the loan that is accruing the highest interest rate.
2. If there are multiple loans with the same interest rate, please apply the additional amount to the loan with the lowest outstanding principal balance.
3. If any additional amount above the minimum amount due ends up paying off an individual loan, please then apply any remaining part of my payment to the loan with the next highest interest rate.

It is possible that I may find an option to refinance my loans to a lower rate with another lender. If this lender or any third party makes payments to my account on my behalf, you should use the instructions outlined above.

Retain these instructions. Please apply these instructions to all future overpayments. Please confirm that these payments will be processed as specified or please provide an explanation as to why you are unable to follow these instructions.

Thank you for your cooperation.

Keep a copy of anything you send them and all payments made for your records.

Issues Adjusting Your Repayment Plan

Trouble with applications for income-driven plans and deferment are common reasons borrowers complain to the Consumer Financial Protection Bureau about their loan servicers, according to SLH. If yours is stalling your application, follow these steps:

• Make sure all of your application materials are in order and properly submitted.
• Continue making payments as you were before so you don’t risk default or late payment fees.
• Stay updated with your servicer and check your application status often.

Most importantly, you want to keep all paperwork and correspondence with your servicers, just to be safe. Take screen shots of payments you make and account balances often, and if you suspect something is wrong, contact them or a student loan ombudsman.