Navient lawsuit: What student loan borrowers need to know
File photo taken in 2014 shows the Delaware headquarters of Navient, the nation's largest student loan servicer.
File photo taken in 2014 shows local officials and Navient leaders unveiling a new sign for the company in Pennsylvania.
You can look up your federal loans on the Federal Student Aid website. Check your credit report to see all of your debts, including both federal and private student loans.
What to do if you’re frustrated with your student loan servicer
When it comes to student loan servicing, “consumers cannot easily take their business elsewhere,” Richard Cordray, director of the Consumer Financial Protection Bureau, said in a statement in January, when the agency filed the lawsuit.
It is possible to switch student loan servicers through federal consolidation or student loan refinancing. But you shouldn’t consolidate or refinance solely to switch servicers because there are potential risks associated with each, says Adam Minsky, a Boston-based lawyer specializing in student loans. Also, there’s no guarantee you’ll be better off with a different servicer.
“The other servicers aren’t exactly rainbows and sunshine,” Minsky says.
Even if you can’t change servicers, there are a number of things you can do to voice your concerns and protect yourself as a borrower: File complaints, check your credit report for errors, learn about your repayment options, and watch out for companies that charge fees for student loan help.
You can file complaints to one or more of the following entities:
Submit a complaint to the CFPB
Submit a complaint to the Department of Education
Submit a complaint to Navient (if it’s your student loan servicer)
The CFPB alleges that Navient ignores borrowers’ complaints. But getting your concerns in writing is still worth doing, if only to improve the system for others, Seth Frotman, student loan ombudsman and assistant director of the office for students at the CFPB, said in a press call in January.
“We receive thousands of complaints,” Frotman said. “That has dramatically informed our work around improving the student loan servicing market.”
Check your credit report for errors
The CFPB also alleges that Navient incorrectly reported disabled borrowers’ accounts as “in default” when the borrowers had actually gotten loan relief through the government’s Total and Permanent Disability discharge program. To guard against a mistake like that, which could severely hurt your credit score, check your credit report for errors. You can get one free credit report every year from each of the three major credit bureaus.
Get up to speed on your repayment options
Student loan servicers are supposed to help you understand the various repayment options. By learning about the options yourself, you can be empowered to hold your loan servicer to that standard. Keep in mind, though, that each of the following options has risks.
Income-driven repayment plans can lower your monthly federal student loan payments by capping your payment at a percentage of your income. They also offer loan forgiveness after you make on-time payments for 20 or 25 years, depending on the plan.
Student loan forgiveness programs, such as Public Service Loan Forgiveness, can relieve your federal student loan debt if you work for a certain type of employer and make on-time payments for a certain period of time
Federal consolidation doesn’t lower your monthly payments or save you money, but it’s sometimes necessary in order to qualify for income-driven repayment or a forgiveness program. Consolidating is frequently confused with student loan refinancing, which is a way to save money on interest by getting a lower rate.
Watch out for companies that charge fees for help
You can sign up for the above options on your own for free. But some companies that aren’t affiliated with the Department of Education capitalize on subpar student loan servicing practices by charging fees to enroll borrowers in free federal student loan programs. So-called student debt relief companies often advertise messages such as “Obama Student Loan Forgiveness” on Facebook and Google. If you’re tempted by such an offer, know that you don’t have to pay for student loan help.
If your servicer isn’t answering your student loan questions, reach out to the Department of Education or your state’s attorney general’s office for help.
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