How to Stand Up to Your Student Loan Servicer

Perhaps there’s a bit of irony in the name “student loan servicer.”

You can easily find stories about the sometimes less-than-satisfactory customer service that student loan services provide. In fact, as of April 1, 2017, the Consumer Financial Protection Bureau (CFPB) had received about 44,000 complaints about student loan servicers since it began collecting complaints in March 2012.

Borrowers report frustrations with loan servicers when contacting customer service and complain that miscommunication sometimes resulted in costly errors, like missed or mis-processed payments. Payment issues like these result in borrowers paying more out of pocket, and they can also affect borrowers’ credit scores because payment history is the most important part of credit profiles.

An Indianapolis woman recently experienced these frustrations firsthand. Chris Boehm, a doctor of veterinary medicine, was six years into repaying about $138,000 in loans for four years of vet school. She never encountered problems until her loan was sold from one student loan servicer to another.

After five months of payment issues, including an accidental double payment, a missed payment, forbearance, and a huge jump in monthly payments, Boehm finally reported that her problems were solved—just before she filed a complaint with the CFPB. There are thousands of stories like this one, but many of them aren’t resolved so easily.

Although consumers may find comfort in the CFPB’s mandate to improve student loan servicers, the best advocate you have at your disposal as a borrower is yourself. Boehm and her husband dedicated time to calling customer service representatives and documenting loan payment activity to prove her case that error after error had affected her account, and it wasn’t her fault.

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To avoid finding yourself in a similar situation, learn from Boehm’s story and follow in her steps.

1. Pay Attention to the Details

Boehm’s story began when her new loan servicer, Nelnet, debited her account twice for one monthly payment—the first of many Nelnet problems to come. When the previous servicer sold Boehm’s loan, she had set up automatic payments, so she knew something was wrong once she saw the double charge. She called customer service and spoke to a representative who told her she could do nothing but let the double payment stand, but at $714 a month, there wasn’t room in the budget. She instead filled out some paperwork to reverse the second payment.

Here’s what Nelnet didn’t tell Boehm: the reversal shut off her automatic payments. Although the servicer later told Boehm that she should have seen a notice about the auto-debit cancellation when she reversed the second charge, she didn’t. She also couldn’t find the notice online after the fact.

When the next payment due date came and the payment wasn’t automatically taken from her bank account, she paid close attention and paid the bill immediately. She also set up the automatic payment again.

“Thank God I printed the receipt for that,” Boehm says. When she made her request online to set up the auto-debit system, the site displayed a timestamp, which she printed. The next month rolled around, and again, no auto-debit occurred. This time, she didn’t notice right away and ended up paying her loan payment late.

2. Document Everything

Boehm later found out her loan went into forbearance, pushing her next payment forward two months. At this point, she had started printing every bit of information that popped up when managing her loan. Even when payments are suspended due to forbearance, loans accrue interest, and Boehm saw her monthly payment jump up by $50. About $300 in capitalized interest (which is essentially the sum of any interest payments you failed to pay) was added to her balance because of the forbearance, but the added $50 didn’t make sense to Boehm.

“We ran it through an amortization program, and it should have only cost $3 or $4 a month, not $50,” Boehm says. “That $300 mistake was worth like $12,000 over the life of the loan.”

She again called customer service, and a representative explained the situation and told her she could write a letter to Nelnet’s correspondence department. In that letter, she cited the company’s mission, vision, and core values: “Customers are #1” and “We strive to provide consistent, clear support for all of our customers.” She then outlined her requests in detail:

Reverse the interest added to the loan principal
Erase the forbearance from the account
Revert the payments back to the amount before the incident
Resume the auto-debit process

Boehm sent her letter along with documentation of her account transactions and activity, and eight days later, the extra interest was removed. Boehm’s next payment was automatically deducted and the situation was solved—after at least five phone calls, a letter, and four payment periods after her first attempt.

“If you have your documentation to show the payments you made or the notes of what was agreed to, that’s going to go a long way to helping you fix the problem,” says Gerri Detweiler, Credit.com’s director of consumer education.

“The other thing to keep in mind is if this mistake has damaged your credit, and they won’t fix it, you may have a basis for a credit damage lawsuit.”

Boehm said her credit wasn’t affected, but Detweiler makes an important point: late payments reported to credit bureaus—which give significant weight to payment history—will hurt your credit scores.

3. Don’t Let the Lenders Get You Down

Despite a story like Boehm’s, Nelnet reviews of customer service aren’t the worst.

In the CFPB’s most recent review of the largest student loan servicers, Nelnet had the third-highest complaint average over a three-month span (between November 2016 and Jan 2017).

Interestingly, Great Lakes Educational Loan Services reviews in the CFPB report were better than Nelnet’s, and Nelnet is in the process of acquiring Great Lakes to ostensibly “enhance borrower experience.”

“When someone doesn’t have the experience that we hope to live up to, we’re disappointed,” says Ben Kiser, a spokesman for Nelnet, which serves more than six million borrowers. “We’re very happy that it was resolved.”

Boehm’s story speaks to some of the most common complaints borrowers have with student loan servicers: payment problems and poor customer service. Boehm was lucky to have been able to clearly state her case. And although it took time and effort to fix the error, her later interactions with Nelnet representatives were better.

“The young lady who called me was really apologetic,” Boehm says. “That felt really nice. I felt like I was banging my head against the wall every time I called.”

Boehm said the most frustrating part of the process wasn’t the service—it was the fact that she had no control over who she worked with. The Boehms had never experienced issues with their other loans, making the whole thing seem that much more unreasonable. With a credit history including eight mortgages (they moved a lot), a student loan in repayment, and a home equity line of credit, she was surprised by how frustrating the process was.

“It’s kind of crazy,” says Boehm. “If someone is treating you poorly, you should be able to choose your loan servicer.”

In reality, that’s often not the case. Remember the Boehms’ story and follow this advice: pay attention to the details, document everything, and don’t let borrowers get you down. While the CFPB continues to watch servicer activity, it’s up to you to protect yourself.