Student Loan Servicers: The Best and The Worst

You’d better keep good records

student loan servicers
(Image: iStock,com/zimmytws)

Both of my kids have some student loan debt. Our goal as a family was for them to graduate with less than $10,000 in debt. Well, one graduated with more than that amount; the other has a bit of debt, but hasn’t yet graduated.

I’ve just emailed them about Student Loan Report, a site that examines all aspects of student borrowing, which recently analyzed the number of complaints student loan servicers have received. Some servicers have received a lot more than others.

‘Set Up to Fail’

 

Student loan servicers aren’t your friends—assume the worst; scrutinize your statements for errors, keep notes of conversations you have with your servicer, keep track of your payments, and follow up to make sure your requests have been handled according to your wishes. None of this can be taken for granted, as the New York Times has reported.

You may want to set aside a notebook that tracks your every transaction with your loan servicer.

Here is an excerpt from Student Loan Report:

“There is now over $1.4 trillion in outstanding student loan debt held by over 44 million borrowers in the United States today.

With all of these student loan borrowers out there, there is an enormous need for customer service and support.

So, who manages these millions of borrowers?

It is not the government, as you may have guessed. Instead, after the government and private companies originate new student loans, they typically hire third-party companies called student loan servicers. In total, there are nine servicers that manage both federal and private student loans.

Servicers handle almost every aspect of student loans. They send bills, accept payments, and help borrowers when any issues arise. Borrowers can use their servicers to change payment plans, enter deferment or forbearance, apply for forgiveness, and more. In general, servicers are the go-to contact for anything related to student loan repayment.

Servicers do notoriously catch a lot of heat for dishonest practices and for failing to help borrowers, however. At least a few times a year, a story pops up about a servicer unfairly optimizing for profit, harassing borrowers, or violating some other regulation.

With all of the different servicers out there, and given the criticism they often receive, we thought it would be interesting to see how they stack up against each other in the consumers’ eyes.”

For more, visit Student Loan Report.