On the eve of the federal student loan repayment restart, many borrowers have voiced frustration over mistakes made by their student loan servicers.
The long hold times we are facing haven’t been a surprise, but errors made by servicers have added a new and complicated wrinkle to the restart.
Sherpa Thought: A big thanks to all of the readers who have reached out to share the challenges you’ve faced.
I’ve collected the most commonly reported issues in this article. Hopefully, it will help other borrowers navigate this difficult time.
Incorrect Recertification Deadlines
Many borrowers are reporting that their servicer is requiring new IDR income certifications. This shouldn’t be happening.
To be clear, borrowers may choose to submit income verification for IDR enrollment. For example, if you are on PAYE and want to sign up for SAVE, income verification will be a necessary step.
That said, the Department of Education policy is that borrowers are not required to submit new income information if they wish to resume payments on their old repayment plan. For borrowers who make more money than what they did in 2020, waiting to recertify could mean considerable savings.
If you don’t want to change plans, the earliest you will have to recertify your income is March 1, 2024.
Recalculating IDR Payments for the SAVE Plan but Excluding Spousal Loans
As the REPAYE plan gets replaced with SAVE, borrowers who were on REPAYE before the pause should receive updated payment amounts.
This revised payment amount should always be lower.
If the servicer is using the previously certified income and the newer, more generous SAVE formula, payment amounts should decrease.
Sadly, some former REPAYE borrowers are getting new larger payment notices. This issue appears to be happening to married borrowers with spouses who also have federal student loans.
If spousal loans are mistakenly excluded, the married borrower could have a considerably larger monthly bill.
Inaccurate Forgiveness Timelines
Many borrowers are getting widely inaccurate information about when their loans will qualify for IDR forgiveness.
I’ve never been shy about criticizing federal loan servicers, but they are not to blame when it comes to forgiveness timeline mistakes.
At some point next year, borrower progress toward forgiveness will get updated. This IDR Count Update will award borrowers credit for periods on non-IDR repayment plans and some deferments and forbearances.
It will be at least several months before servicers get updated numbers.
For borrowers, extra work will be required to determine their progress toward IDR forgiveness.
Sherpa Tip: Don’t expect help from the Loan Simulator. Even though it reports expected forgiveness timelines, right now, the estimated time remaining projections are only reliable for borrowers starting repayment.
It appears that the Department of Education will overhaul this aspect of the tool once the IDR count update is completed.
Correcting Servicer Errors
The best approach for fixing a servicer error will depend on the type of servicer error.
If they provide bad advice, there isn’t much for the borrower to do. It’s not your job to educate the representatives. At most, you can file a complaint about the servicer. Right now, the most important thing is to verify any information you receive.
If they miscalculated your monthly payment or they want an immediate recertification, more steps are required.
In many cases, fixing an error is easier if you can identify how the mistake was made. For example, if you were on REPAYE, but your SAVE payment is larger, explain that they may have calculated your monthly payment without including your spouse’s loan information. Ask them to rerun the numbers.
If they want an immediate income recertification, pull up the Department of Education article that says that March 1, 2024, is the earliest deadline. Ask why this particular rule doesn’t apply to you.
Sadly, playing nice with the loan servicer isn’t always enough. Sometimes, filing a complaint is the best way to get things resolved.
Filing a Servicer Complaint
The best way to draw attention to a loan servicing issue is to file a complaint with the Consumer Financial Protection Bureau.
These complaints help the CFPB and the Department of Education identify widespread servicing issues. Additionally, they trigger a higher-level review of each individual complaint raised.
The CFPB complaint is often the fastest and most efficient way of correcting a servicer’s mistake.
Tips for Dealing with Servicers
Call waiting times are brutal. The longer the wait, the more frustrating the experience.
It is tempting to take out this frustration on the representative. After all, they get paid to help you, and in many cases, they fall short.
Unfortunately, the people working in loan servicer call centers are often underpaid, overworked, and insufficiently trained.
Rather than getting angry, be a breath of fresh air. Be patient and understanding. Be kind.
Whether or not you get help with your student loan issue may come down to the motivation of the call center representative. Be the type of person they want to help.