Student Loan Servicer Errors: How to Fix & Avoid (5M in 1 year!)
According to recent reports, 5 million student loan borrowers have been affected by servicer transfer reporting errors in the past year.
According to the CFPB, servicer transfer errors affected 5 million student loan borrowers last year. Late fees, credit score damage, and loan default can result from missed payments, incorrect loan balances, and other errors. The CFPB recommends tracking loan servicers, communicating often, knowing their rights, and monitoring credit reports. Navient and FedLoan have been accused of misapplying payments, providing inaccurate information, and failing to inform borrowers of their rights. TitanPrep, a student loan debt relief company, helps borrowers build a "complete portfolio," file documents with servicers, and monitor NSLDS.
Student loan borrowers have long been subject to a number of challenges when it comes to managing their loans, but one issue that has particularly impacted many borrowers in recent years is the problem of servicer transfers. When a loan servicer changes, it can lead to a number of reporting errors that can have serious consequences for borrowers.
Millions of student-loan borrowers had their debt transferred to new companies over the past year — and it resulted in payment errors for 'hundreds of thousands of accounts,' a federal consumer watchdog says – Yahoo News
According to a recent report from the Consumer Financial Protection Bureau (CFPB), as many as 5 million student loan borrowers have been affected by servicer transfer mistakes in the past year alone. These NSLDS errors can include lost payments, incorrect loan balances, and other errors that can lead to borrowers being charged late fees, having their credit scores damaged, or even defaulting on their loans.
Servicer Communication Challenges
One of the biggest challenges with servicer transfers is that borrowers often do not know that their loan servicer has changed. This is because the loan servicers are often owned by large financial institutions, and the transfer of a loan from one servicer to another is done behind the scenes. As a result, borrowers may not realize that their loan servicer has changed until they start receiving communications from the new servicer or notice that their payments are not being applied correctly.
Another problem with servicer transfers is that borrowers may not be properly informed of their rights and responsibilities when their loan servicer changes. For example, borrowers may not be aware that they have the right to request a loan modification or to appeal a decision made by their loan servicer. Additionally, borrowers may not be given adequate instructions on how to submit their payments or how to contact their loan servicer.
Navient Servicing Errors
Navient, one of the largest student loan servicers in the United States, has been accused of committing several errors on student loan accounts. These errors include misapplying payments, providing incorrect information about loan balances and repayment options, and failing to inform borrowers of their rights and responsibilities. In 2017, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Navient for these alleged violations and in 2020, the Department of Justice (DOJ) also filed a lawsuit against Navient for similar reasons.
FedLoan Servicing Errors
FedLoan Servicing, also known as the Pennsylvania Higher Education Assistance Agency (PHEAA), is a government-contracted student loan servicer that services loans for the Federal Family Education Loan Program (FFELP) and the William D. Ford Federal Direct Loan Program (Direct Loans). Like other loan servicers, FedLoan has been accused of committing errors on student loan accounts.
These errors include misapplying payments, providing incorrect information about loan balances and repayment options, and failing to inform borrowers of their rights and responsibilities. In 2017, the Consumer Financial Protection Bureau (CFPB) received more complaints about FedLoan than any other student loan servicer.
In 2019, the CFPB and the Department of Education jointly announced that they will be taking actions against FedLoan Servicing for allegedly mishandling the loan rehabilitation process for defaulted borrowers. These errors have caused significant financial harm to many borrowers, with some even defaulting on their loans as a result of FedLoan's actions.
It's worth noting that according to the CFPB, the problem is especially prevalent among borrowers who have multiple student loans, with more than half of these borrowers' reporting problems with their loan servicers. Furthermore, the CFPB found that borrowers who have defaulted on their loans are more likely to experience servicer transfer mistakes, with nearly 80% of these borrowers' reporting problems with their loan servicers.
The CFPB has recommended that borrowers take several steps to protect themselves from servicer transfer mistakes and reporting errors.
Keeping track of their loan servicer: Borrowers should keep a record of the loan servicer for each of their loans and should check their loan servicer periodically to ensure that it has not changed.
Communicating with their loan servicer: Borrowers should make sure to communicate with their loan servicer regularly and should keep a record of all communications.
Knowing their rights and responsibilities: Borrowers should be familiar with their rights and responsibilities when it comes to loan servicing and should know how to appeal a decision made by their loan servicer or request a loan modification.
Monitoring their credit reports: Borrowers should check their credit reports regularly to ensure that there are no errors that could be caused by a servicer transfer mistake.
Servicer transfers can cause serious problems for student loan borrowers, with as many as 5 million borrowers affected by servicer transfer mistakes in the past year alone.
It is important to stay vigilant and take steps to protect yourself from servicer transfer mistakes, such as keeping track of your loan servicer, communicating with them, knowing your rights and responsibilities, and monitoring your credit report.
EdaptUSA Can Help
As part of your membership with EdaptUSA, we assist you by keeping a running log of all recommended documents for your successful discharge at the end of your program- in one central location.
A vital part of our services is helping you build a “complete portfolio” for when it comes time to apply for your discharge. We also make sure that all of your documents are filed properly with your servicer, and monitor your r for any discrepancies, ensuring that your servicer is reporting all your account records accurately to the DOE.