Generally speaking, borrowers get no say in who services their federal student loans. This is unfortunate because it means the federal loan servicers, recipients of lucrative federal contracts, have very little incentive to provide high quality customer service. As long as they meet a minimum standard of service, there really is no reason to try to improve.
It is in this context that we are going to try to review some of the federal student loan servicers. The first loan servicer to be reviewed will be myfedloan.
Myfedloan call centers all seem to be based here in the United States. In my three plus years of working with myfedloan, my experience has been that the people I chat with genuinely want to help. In this regard, myfedloan seems to be one of the better federal loan servicers.
Another positive on myfedloan has been their website. The information isn’t great, but the layout usability is better than most other federal loan servicers. I’d like to see more utilization of studentloans.gov and other federal resources, but why they do have is accurate. Unfortunately, there just isn’t that much information available.
As nice as most of the customer service representatives have been, their student loan education seems to be lacking. I think it is probably a little unreasonable to expect that the call center representative will be an expert, but the key is not to get things wrong. This is where things get scary. It is one thing to say I don’t know… hopefully that means you can point the borrower in the right direction. But to give someone inaccurate information is simply inexcusable.
My general practice has been to ask a few questions that I already know the answers to before I ask about the information I need. By asking questions where I already know the correct answer, I can gauge the competence of the person answering the questions. If I feel the questions are incomplete, or worse, I’ll take future responses with a grain of salt. In some cases I’ve even shared with the loan servicer that I learned something different, and then pointed out the more accurate information. In many cases, they have been very pleasant and admitted their error, but kindness only goes so far.
Hopefully myfedloan will do a better job in the future educating their service representatives.
The biggest problem with myfedloan has been the long wait times to re-certify income-driven plans, and to process new applications. Myfedloan is presently dealing with a huge backlog of REPAYE applications, and borrowers with applications dating back to December of last year have not been processed.
This issue is completely unacceptable. When extended application processing times cause borrowers to miss deadlines or be delayed, things get very expensive. Myfedloan seems to think that a forbearance is an acceptable solution to delayed processing. While the $0 monthly payment is certainly manageable, it does not address the interest that accumulates while the borrower waits.
Making matters worse is the fact that borrowers who are on income-driven plans are often working towards student loan forgiveness. Each month of forbearance is a month that does not count towards forgiveness. For some, it means that instead of paying 15% of your discretionary income now, you will be paying 15% of your discretionary income some month in the distant future. Unless you will be making less money in the future, these delays are costly.
The Bottom Line
Myfedloan is definitely a product of a broken federal student loan servicing system. The loan wait times for processing and the lack of proper training for customer service representatives are two major concerns. The redeeming quality about myfedloan seems to be the pleasant attitude of the people answering the phones.
If you have myfedloan, staying diligent with everything is essential. Be sure to do lots of research before calling with questions, and if you need anything processed, be sure to get everything addressed long before it needs completed.