Declaring War on Your Student Loan Company

Michael Lux Blog, Strategy, Student Loans 0 Comments

Some student loan lenders do a good job of providing information, answering questions, and processing payments.  Others are terrible.  Their call centers seem to be situated in the middle of a busy intersection with customer service reps using cell phones from the late 80’s.  Sometimes they process payments the wrong way, other times the don’t do it at all and then charge you a late fee.  When you finally discuss things with someone they tell you that their error is your fault.  It is incredibly frustrating and irritating.  The powerlessness that comes with someone taking advantage of you in this manner while you can do nothing is perhaps the worst part.

Today we will discuss ways to even the score with your student loan company.  The goal will be to hurt them in the only place they care, their pocketbooks.

The Ground Rules

The strategy here will be for dealing with lenders that are a major headache and do everything they can to nickel and dime you.  This is not a plan for dealing with cases of major fraud where thousands of dollars are at issue.  This approach is also not for people who are in default or thinking about bankruptcy.  In those circumstances, it is best to hire a lawyer familiar with the rules of debt collection in your state.

Additionally, it is worth pointing out that no matter how justified your grievance is, it is never ok to verbally attack the customer service representatives at the call center.  These reps are underpaid and undertrained.  Many are victims of the same system that you are.  Anger directed at them will only make your problems worse.

Getting Ready for War

If you are going to try to make life miserable for your student loan company, one of your most valuable assets will be evidence.  For this reason, conversations over email are preferred over phone calls.  (It is also the reason that most lenders won’t communicate over email.)  Be sure to save letters, statements, and any other notice you receive from your lender.  Additionally, your bank or credit card company can be an ally.  If you use your bank’s bill-pay system you will have third-party records of all payments that you sent and when you sent them.  The more you can do to prove what you are saying, the better.

Step 1: File a Complaint with the Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) is the government agency charged with making sure big companies treat individual customers properly.  In their short existence, they have gone after numerous for-profit schools that were misleading students and they recently filed a lawsuit against Navient (formerly Sallie Mae) for their customer practices.

Filing a complaint with the CFPB is easy, and it helps your individual case and the cases of others.  The CFPB has produced substantial results in the past, including effectively shutting down some colleges.  Student loan companies do not want to have CFPB issues.  When you file a complaint against your lender (whether it be a private lender or a federal loan servicer), your lender is required to respond.  This puts you on a much more equal footing with the student loan company and it means your grievance is likely to be taken more seriously.

In addition to helping your case, as complaints mount against any one individual company, the CFPB will consider taking action on behalf of all borrowers.  This could have devastating financial consequences for your lender.

Step 2: Get Rid of Your Lender

Unfortunately, this is not an option for everyone, but it is a great way to hurt your lenders bottom line.

Though it may seem strange, the faster you pay off your loan, the less money the student loan company makes.  They profit from interest and from late fees.  If you pay off your loan quickly, they get very little.  To the lender, the ideal borrower is someone who pays the minimum each month, occasionally pays late so they get some late fees, and has to make payments on the loan for many years.

There are two ways to make sure your student loan company stops profiting from your debt.  The first option is to just pay the loan off entirely.  This is obviously a very expensive route to go, but it would result in the permanent removal of one headache.  The other route would be to refinance or consolidate with another lender.  The way this works is that your new lender pays off the balance of your old student loan.  You repay the new lender per the terms of a new loan agreement.  Ideally, you are able to get lower interest rates or lower monthly payments, but it will depend upon your income and credit score.  For a full list of lenders and company reviews, be sure to check out our page on student loan refinancing and consolidation.

Going Forward

You are never going to get a genuine apology from your lender, nor will you be able to put them out of business.  However, you are not powerless in this situation.  There are steps that can be taken that will hurt your student loan company in the only place they care about, their bottom line.

Also, if you have any ideas for getting back at your student loan company, be sure to share them in the comments.  The more people that take action against lousy lenders will provide all the more reason for lenders to treat their customers better.