This week the Consumer Financial Protection Bureau released its annual student loan report. One cool feature of the report is that they include a number of actual complaints that people have about their lenders. While the complaints are useful to know about, we thought some suggestions on how people could address these complaints would be helpful.
The Unrelenting Lender
Borrower 1: I’ve exhausted all of my forbearance options, which unfortunately are the only options with private loans. At this point, I don’t know what to do. I am not asking for the world here – I am simply asking for a little HELP making these payments. I have made a good faith effort, for the most part, to repay my debt. I feel that I should be offered repayment OPTIONS, just like Federal Loans. I am 26 years old, and still living with my parents because of this debt.
Borrower 2: I have no options left in regard to lowering my payment, forbearance, deferment or delaying my payments. I work full time as a teacher, but my student loan payment is more than a third of my income. My [specialty student loan company] just told me that there is nothing I can do but let my private loans go into default and to try to work something out with the collections agency. I have no qualms about paying a monthly fee that I can afford, but currently the money just does not exist.
Private loans often offer the harshest terms and are the most inflexible. In most of these cases the contract between you and your lender is written to favor the lender, and there are very few options available within the legal system. Unfortunately, fundamental fairness really doesn’t enter into the equation. As a result, there is little you can do.
Depending upon your lender, you can luck into some sort of repayment plan that isn’t really advertised. To find these programs, it helps to make numerous calls and talk to people within different departments. Someone in collections could be much better equipped than someone in basic customer service.
If the conventional route, and slightly less conventional route don’t work, you could get really creative. Many people, often those who find themselves in especially bad/cruel/unfair situations, resort to publicly shaming their lender via the internet or social media. Not surprisingly, when these social media campaigns generate some attention, lenders think twice about their position. This approach is definitely an act of desperation, but sometimes people have little choice.
Fees and forbearances
Borrower 3: [Very large depository institution] who provided all 6 of my private loans amounting to $53,000, now tells me I owe $750 a month and that is without considering my monthly payments to federal loans. I called to ask what my options are since $750 is not a realistic monthly payment considering I am just out of college and my other expenses I accrued in order to move and settle. The people I spoke to gave me options of paying the $750 monthly or pay the $750 this month and enter into forbearance. I asked if there was a way to set up a payment plan that I could afford, as I understand these are my debts and I fully accept the responsibility to pay them completely. The representative said that the fee was set and that there was nothing he could do to alter the monthly payment. I repeated to him that this was not a feasible option and I could not afford that amount and I would be left unable to pay. He repeated my option of the initial payment then APPLY for forbearance. This is no solution to me as forbearance is just a way for interest to accrue as I am left after the [time] forbearance extension with the likely reality that $750 will be still be a payment I cannot afford.
The person with this complaint clearly sees through the lender scheme here. The lender wants payment for processing paperwork that should be free, just to go on a forbearance, that will ultimately make things more difficult. The fact of the matter is that a forbearance is almost always a bad idea. Paying a huge fee just to get a forbearance is ridiculous.
Unfortunately, lenders don’t usually consider your federal student loan payments, because they expect you to pay them before anyone else. Like the previous example, the fishing for repayment options and public shaming routes are about your only choices. However, should you have a good income/credit score or a willing cosigner, refinancing or consolidating your loan might be an option. Should you be able and interested in going that route, here is a list of student loan consolidation companies to look into.
Fixing the Lender Mistake(s)
Borrower 4: I was told that I was eligible for a forbearance, however . . . [specialty student loan company] continues to tell me it is “processing” the forbearance. I have called in numerous times and even escalated the situation to speaking with a manager last when I was told the matter would be taken care of within 3 to 5 business days which have again passed and my account still shows as past due.
Borrower 5: I have a private consolidation loan through [specialty student loan company]. . . I called . . . to see what options I had regarding delaying the payment on the loan. The customer service agent . . . told me I could put the loan into a forbearance for 3 months. She told me in order to do this I would have to pay a $50 processing fee. She gave me a confirmation number . . . and told me that I would not have a payment due until [date]. Around [date], I received an email from [specialty student loan company] saying my private loan was past due, even though I thought it was in forbearance. I called [specialty student loan company] on 4 separate occasions over the following days. Each time I waited on hold for approximately 20 minutes, was eventually told that I had to speak to someone in collections, and each time, rather than being transferred, I was hung up on. Today, I finally got through to collections, and they told me that I am not eligible for a forbearance, and that “their employee made a mistake.” I told them repeatedly that I had a confirmation number and that the payment I made for the forbearance was deducted from my checking count. I told the representative that I did nothing in error, and I thought they should honor the forbearance.
Lenders telling you one thing and doing another can be especially frustrating. If you find yourself in a situation like this, step number one is to make sure you put together proof of your lender’s error. This is one of the reasons that communication via email should be your first choice whenever possible. Once you can prove your lender made a mistake, the next step is to find someone who is capable and willing to fix the problem. If you ever find yourself in this situation, one trick to get out of it is to continue working with the same person. If you can, get a direct line and keep calling them. The old saying is that the squeaky wheel gets the grease. Be the squeaky wheel. Keep calling and your service representative will eventually realize that helping you is much easier than letting your issue fester.
Another route would be to see if your lender has an ombudsman. This individual is supposed to hold the company accountable and help the company and the customer reach a resolution in any issue that they may be having. If your lender has an ombudsman or a customer advocate, they might be in the best position to help you get your mistake corrected.
No matter what problem you are having with your student loans, we will be glad to offer suggestions and insight… feel free to send us an email.