Dealing with student loans can be a frustrating process. Occasionally, we get bad news from our lenders. Sometimes, what we are being told seems flat-out wrong.
When you feel like you are at your wit’s end, it is important to know that you do have options. One of the better options may be filing a complaint with the Consumer Financial Protection Bureau (the CFPB).
The CFPB was created in response to the mortgage crisis and subsequent recession. The purpose of the CFPB is to protect regular people from being taken advantage of by financial institutions.
Not only is filing a complaint with the CFPB easy but doing so can get you results AND the information can be used to help others.
Filing a complaint can help others
One of the best examples of the CFPB complaint process making a difference was when they exposed the practice of auto defaults. A number of people complained to the CFPB that even though they had never missed a payment, when their co-signer died, their loans were automatically placed into default. CFPB used these complaints, created a consumer alert, and brought some attention to this nasty process. It was a positive step for many borrowers.
The only way the CFPB can detect deceptive or fraudulent practices is if consumers complain. When a bunch of people raise the same issue, it increases the chances of something being done.
Here are a few examples of how borrower complaints made a difference:
- Service members complained about violations of the Service Members Civil Relief Act – As a result of the complaints, one loan servicer was forced to return $60 million to 77,000 service members. Further, these complaints led to new specific policies that have automatically saved service members over $20 million since 2015.
- Improvements to signing up for Income-Driven Repayment Plans – Complaints about the difficulty signing up for income-driven repayment plan led to the Department of Education strengthening contractual requirements for loan servicers. The end result was a more streamlined enrollment process.
- Reducing the practice of “auto-defaults” – By shedding light on the shady lender practice of “auto defaults”, the CFPB drew enough attention to the issue that the largest private lenders have stopped including auto-default provisions in new contracts and stopped trying to enforce “auto-defaults” on older loans.
Filing a complaint can help you fix errors or mistakes
Did your loan servicer make a mistake calculating your balance?
Was there an error processing your payment and now you have a late fee?
Filing a complaint can also bring attention to your individual situation. When you file a complaint, your information is sent to your student lender. They will have 15 days to respond to your specific complaint. According to the CFPB all but the most complicated complaints are expected to be resolved with 60 days.
The good part about this process is that you are getting a third party involved in your dispute with your lender. Obviously, the CFPB is not some magical entity that can fix any problem, but it is one step you can take to ensure you are treated fairly.
How do I file a complaint?
The CFPB has several different complaint forms for various financial institutions, including a student loan complaint form. The form is broken into 5 easy steps.
- What Happened? – This is the step where you explain exactly what went wrong with your student loan.
- Desired Resolution – For this part, you explain exactly how you think the situation should be fixed. (Tip: Be reasonable, if you ask for a million dollars and a unicorn, you won’t get it)
- My information – This is your contact information, make sure you give them an email that you actually check.
- Product Information – This is the part you submit information about your lender AND upload supporting documents.
Tips for filing a complaint
You will get the best results if you are reasonable and have good supporting documentation. The best way to communicate with your lender is via email or letter. Phone may get the quickest results, but you have very little in the way of proof at the conclusion of a conversation (unless you have a recording). For this reason, lenders are hesitant to communicate via email or letter. Even if you are forced to communicate by phone, at the very least you can take notes of your phone calls. Track the time you called, who you spoke with, and what was discussed.
If you are going to submit a complaint, you might be able to make it better by discussing it with others first. In addition to the people you may already know, there are Facebook groups dedicated to student loans and student loan discussion forums. Be careful not to share any personally identifying information, but going through the exercise of discussing it with others first can help you better articulate your complaint and help you identify the key issue or issues to focus on.
Start your complaint with the CFPB here.