Just in case you missed it, we did a Facebook live where we discuss your student loan servicers.
Check it out for the most update to date information on your student loan servicers and the need to know information they won’t tell you when you graduate!
Nick: Welcome to Episode Three of Student Loans, Ask Me Anything, with Marques McBride. My name is Nick Bentley, and I’ll be your host today. What you are about to hear is a recording from August 9th, 2017. What we discuss in this episode, is Student Loan Servicers, how they effect you, and why they may, or may not have your best interest in mind when it comes to communication with them about your repayment plans. We’re going to discuss Betsy DeVos, and what a single payer loan servicer would mean for you, if that gets approved. And we’re going to discuss some of the outstanding lawsuits against Navient, and how those can effect you. And what other services are out there that you may want to switch to, and then why they are not willing to help you through the process, and why it makes sense for them to keep you right where you’re at. Enjoy.
Nick: All right guys, welcome to this week’s Ask Me Anything. With me always is Marques McBride.
Marques: Here I am.
Nick: in the house, ready to go.
Nick: And today… Again guys, this is the Youth Student Loan Center — we help students lower their Student Loan payment, get in to new repayment plans, all of that stuff that we focus on. But we are doing this to answer a lot of questions, and give some insight into some of the things that they just don’t tell you about when you graduate college, and when you go through the repayment process, and after you come out of your grace period — what are your options, and all of that.
So guys we’re live right now, so go ahead, if you have any questions, chat them in. But the subject of today is going to kind of be two-fold.
Number one, I want to talk to you guys about Betsy DeVos, who is the Director of Education under Donald Trump. And what’s been transpiring with what she’s got going on. And then also why what she’s got going on matters, and how it can effect you.
Because it would, and it can potentially all of us, in a pretty big way.
Marques: Yes. It can.
Nick: So, Marques why don’t you go ahead and tell them about what was happening in the Student Loan industry — A) where we’re at currently; why Ms. DeVos was trying to do what she was doing. And then what the effects, and potential impact that it could have on you, your student loans, and what’s kind of transpired with some of the other guys.
Marques: Yes. You know, when it comes to student loans, you have the Department of Education, but they don’t want to do all that work on collecting on the debt, on all of these different loans and stuff, so they got these different companies that does the collecting for them that are called “servicers.”
Marques: OK, there’s all kinds — you got Navient, Fed-Loan, Nelnet — I’m pretty sure you’ve heard of Sallie Mae somewhere —
Marques: — back in the day. They’re not there any more — they’re called Navient.
So — they have these different companies that collect on the debt.
Nick: So you mean, you go get a loan for your student loans, like for dorm or books or whatever they give it to you for — it’s not actually not actually the government that is collecting the debt from you after you graduate; they basically… They contract out these other companies to collect from you.
Marques: Exactly. You know, they’re hired by the Department of Education.
Marques: They collect on the debt.
So what she was proposing was that she gets rid of all the different servicers and there’d just be one select servicer, one select —
Nick: — that was a government entity.
Marques: — that was a government entity.
So the problem with that is — a lot of people that have difficulties reaching their servicer and trying to make a payment and trying to get the right bank, or they’ve been misinformed, or had some sort of just bad customer service experience or whatever — it limits them, because they don’t have an option to switch to a different servicer; they’re just kind of stuck.
So if you have a bad relationship with that company and they always give you heck every time you call — you’d be stuck, and it’s kind of bad.
Nick: What do you mean by — a bad relationship?
What would something like that look like? Because a lot of people… The word servicer just means the people that are actually collecting on your debt. But you come out, and you have to pay these guys; you start getting bills in the mail from Navient, Nelnet, Fed-Loan, whoever — and can you explain what a bad relationship would be like?
What would you look out for if you were paying those guys back? And what are some of the struggles that you might come across dealing with some of the different ones out there?
Marques: Right. So…
A lot of times, if you call in… I’ve heard from different personal stories, even with people that we help, that they’re not able to get someone on the phone; they’re always redirected different places. Hold times — things of that nature. When they get somebody on the line, they’re not really informative. They end up with a higher payment than usual.
You ever called a place — a company — you call and you get that first person in customer service, and they don’t really know exactly what’s going on. They’re kind of feeling their way through, they’re kind of sounding like a robot they’re reading a script?
Marques: But you call back, the same day or the next day and you get that one person that’s just absolutely amazing, that goes the extra mile, and things of that nature. So it’s kind of iffy.
But right now, how there’s different servicers — you can consolidate and end up with a different servicer if you’re not pleased with where you’re at right now.
Marques: If that would have happened, you would have been just stuck with one.
Nick: Or if… One of the things that I heard about, yesterday actually — I think you were telling me about this; we were going to chat about this today — was the fact that, these guys at Navient, were actually knowingly putting students into the wrong repayment plans.
And why and how that is such an unethical thing to do today, and B) how it really screws people out of the options available.
I don’t know if you want to talk about Navient, and maybe give a little back story to that and then —
Marques: Let’s talk about it.
Nick: If people do have Navient — A) how can they overcome what’s going on right now? What do they need to know about it? And C) what can they do to get away from that?
Marques: So this is the thing, servicers — their main job is to collect on the debt. That’s what they’ve been hired for; that’s how they get their money, and that’s what they do. So it’s not in their best interest for you to get a low payment, or a zero dollar payment, or your loans forgiven. So if you’re calling them for help — the first mind for them is, “OK, sales. I have to get some kind of payment out of them.”
The story was that there were some representatives that — when a person calls in, instead of them advising them how to save money, or get a lower payment, or what have you, they were either A) place them on forbearance for a year…
Mind you — you only have 36 months of forbearance time rights, and if you use forbearance, the interest is accruing, so the balance is getting higher.
Nick: There you go.
Marques: So advice like that, where it seems like it’s a help for you, but it really is a vested interest in them.
Nick: Yes. Because they want to continue to hold the note.
Marques: They want to hold it, and they want it to grow.
Nick: Yes. Exactly.
Marques: There was another story where — a person calls in — hey I’m going through it; can I get under something that’s based off of my income? — and the way that they project all the information to them, that caused them to have a payment that’s higher than —
Nick: Than it needed to be.
Marques: — than it needed to be.
Nick: Their job is to get the money. So get the money baby, and let’s move on.
Marques: Yes. And so they’re not… You’ve got to understand their motive. Not talking bad, or anything like that, but that’s just what they’re paid to do, is to collect under that.
So you’ve got to understand that.
So people — when they call these places and they get these type of experiences — they look for — OK, I need help. Where’s the real help? And if this would have monopolized to just one servicer, there really wouldn’t be any options to escape.
Nick: Outside of that.
Marques: If that servicer that they chose was or something like that.
Nick: I think that’s what — the underlined goal probably was, was to give them more consistent, congruent, better information…
Nick: But the problem with that is guys like Navient, who are in a huge lawsuit with the Consumer Financial Protection Bureau right now because — just what you were saying — they knew what they were doing and they weren’t helping people. They’re a huge servicer. Holds hundreds of billions. We were going through the numbers earlier. What is it? One point how many trillion dollars in Student Loans?
Marques: A trillion.
Nick: A trillion bucks right?
Marques: A trillion, not billion.
And they were actually one of the most popular ones, because they were Sally Mae, and everybody used Sally Mae — and that name really rings bells further than Fed Loan or any of the other servicers. But it really took the toll when some soldiers in the military that went overseas — they were servicing their loans specifically.
So when they went overseas, instead of placing them in a deferment, they did a forbearance, all that whole time. And they came —
Nick: Accruing the interest while they’re overseas serving.
Marques: While they’re protecting our country, you know. We’re supposed to be protecting our own.
— they came back and found out that they’re loans were defaulted, and they had no forbearance time at all. Because of…
Nick: Their lives are gone, and…
Marques: Yes. And that’s where it kind of sparked right there.
Marques: — sparked their interest. So… That’s a huge example as to — what you’ve got going on, and who you’re handling it with. And what their interest is.
So, it’s a scary thing.
Nick: So if Navient is your current servicer right now —
Marques: There is a lawsuit.
Nick: There is a lawsuit now.
Is there anywhere that we can direct them to find more information out about that?
I mean, we have a really, really popular blog post about it that we wrote about what you can do. But can you tell anybody that’s listening right now on what can and what they should do?
Marques: You definitely want to look it up obviously. Just kind of Google and see what the Navient lawsuit is. They’re not going to advertise it on the website.
Nick: No, not Navient.
Marques: If you call them, they’re not going to talk about it. So, you really want to Google it and research and see. They haven’t made any judgments on it as of now — as to the borrowers and what they can get out of it.
So they kind of keep it under wraps, but consumer.gov —
Nick: But moving away from that servicer is… It can only benefit you at this point.
Marques: You have an option to.
Nick: You have some options to get away from those guys.
Marques: While the laws are still how it is and it is at a standstill and DeVos hasn’t accomplished that goal yet of having just one servicer — it’s best that you do.
And the option, or the way to get out of a servicer, is to consolidate because you can consolidate your loans into one loan, and that one loan can be with a different servicer of your choice.
Nick: With your choice or do we use specific ones based on specific situations?
Let’s talk about that.
Marques: So obviously the average person doesn’t know the pros and cons of who to choose as a servicer — what’s best for them.
Some servicers are better than others as far as their support and how easily accessible the information is. There are online portals and things of that nature.
So — chat support, live chat — so there’s different advantages and disadvantages when it comes to selecting servicers, but ultimately it is your choice when you do consolidate.
Nick: All right, cool.
So let’s talk a little bit about — what do we see in the future of servicers right now?
I know that certain times it makes sense to do that. What are you seeing happen right now? What are you experiencing on a day-to-day basis where you talk to these hundreds of people that we’ve helped go through their consolidation problem? What are seeing right now that’s most prevalent that you think people need to know?
Marques: A lot of servicers — they try to talk you out of consolidating. They try to discourage you from consolidating because… Remember this — what consolidation is, is — you’re taking your multiple loans or whatever — they’re getting paid off, so instead of you having those multiple loans anymore you are just going to have one new loan.
So the servicers — they don’t want to get paid $10,000 if that is your loan debt. They don’t want $10,000 right now. They want $20,000 later on down the line because of interest.
So they want to talk you out of them losing your account with them because they want to keep it to gain interest. I’ve seen a lot of people from the servicers try to discourage them from —
Nick: So they’ll call in a little bit confused saying — hey, Fed-Loan told me this and when I talked to whoever here, we’re talking about this.
Why is there confusion there?
It’s the same reason why banks might fight over the paper of the note. It is kind of the same thing there.
We just put in a handy dandy link for those of you watching live right now. “Navient defrauds millions of student loans borrowers.” I believe if you just Google Navient lawsuit we are right there. This page gets a lot of traffic because of the amount of people that have Navient as their servicer and they are looking for way out — “Can I benefit off of this? What does this mean for me?”
There is a bunch of good information there and as always if you have any questions about student loans or consolidating or getting away from Navient or any of the other servicers that you’re struggling with — you can definitely call us; we put the number in the chat again but it’s 813-775-2058 that’s the direct number.
Marques you got anything else that you think we need to chat about, about the servicers and moving from one to the other before we take off today?
A lot of people — even when you move from one servicer or from another when you consolidate — you have to understand that the debt is no longer there.
Nick: I’m sorry — that the what?
Marques: The debt is no longer with your previous servicer.
Nick: Gotcha. So basically, one servicer is going to buy it. The note is going to be transferred from somebody else, so you should not continue to pay that original.
Marques: Exactly, but other than that — once you consolidate and move forward, you are good to go with that new servicer.
I would encourage the people to research and see exactly some of the reviews that your current servicer has — when it comes to customer service aspects and the advice that they give — and kinda reconsider. Like — OK is the servicer that I’m with now, is this a good servicer for me based off of —
Nick: Because you got to deal with them for a long time.
Marques: Until the loan is paid off or if they’re forgiven.
So you want to do your research. Don’t just… When you graduate and you have these loans, you don’t choose them you just fall into whoever servicing them.
Stuck in a queue. Whoever picks them up, picks them up, when you graduate.
So now that you have the loans, you have the power to either consolidate them and choose who you want to be with. So you have an option. You don’t have to stick with who you have.
Nick: Yes. One thing — and I can’t remember if it was Jessica or if it was you that I was talking to about some of the things that people call in and experience.
So when you graduate, you’re put into a standard plan, which is a ten year repayment.
One of the reasons why they may not want you to consolidate or more servicers is going through that process — it does two things.
Number one is — it extends your repayment period to 20 or 25 years for most cases.
Some of them are only 10 years with . . . [inaudible]
So when you extend the payment, it’s like taking your $300,000 mortgage, and instead of paying it over 10 years you’re going to expand it out. So whatever your payment is —
Marques: It’s going to lower.
Nick: It’s going to lower the payment which means that the servicers collect less money from you, right?
Nick: So that’s the first thing — that why they don’t want you to go through that process.
The other part of it though is, and we talked about this on last week’s chat Marques, was — if you get enrolled into an income driven plan, after 20 or 25 years, you qualify for forgiveness.
So that’s going to do two things.
Number one, it’s going to lower the payment. And number two, they know that at the term of that note, they’re going to have to write off a chunk of that debt that they’re not collecting from the student loan borrowers.
And when — I don’t know if it was Jessica or if it was you that was telling me about the call, I think it was last week or something — people don’t, you don’t graduate college understanding that and I think it’s so important for those of you listening right now to understand the motivation behind the servicers and why they do what they do —
Nick: — and why they don’t go out of their way to help you, and why companies like ours exist to help people — because of that lack of information.
So, anything else, man?
Marques: Other than that — stay educated, people.
We’re here. I would encourage you guys to take advantage every Wednesday to come to join us to ask any question. This is really free consultation.
Marques: — to tell you the truth. I mean — obviously we can’t look up your loans right here, live. Security purposes. But…
Nick: That might —
Marques: Might do it. Never know. We might do it.
But take advantage of the free knowledge, guys. Because we’re really trying to pour into you guys, so you can have a better understanding of what’s going on, so you don’t just going to be tossed throwing a football, all over the place by the Department of Education.
Be encouraged, and be strengthened.
Nick: Yep. Absolutely.
Thanks guys. Have a good one. We’ll catch you next week.
Marques: See ya.