Student Borrowers Being Illegally Refused Help From Servicers

Are you having problems paying your student loans? It might be comforting to know that you’re not alone.

What’s not so comforting? The fact that it’s probably not your fault that you aren’t able to keep up with your payments. 

The Consumer Financial Protection Bureau (CFPB) has released information that shows how borrowers have been refused access to income driven repayment plans that they have legal right to take advantage of.

Again… borrowers are being refused access into the income driven plans that they are legally allowed to take advantage of.

In some instances, some servicers of federal student loans have failed to approve applications.

Income driven repayment plans were invented to help borrowers like you. They do this by putting a cap on your monthly payment so it’s only a certain percentage of your income. Your loan balance will be forgiven after you make these steady payments for 20 to 25 years.

Sounds like a great idea, doesn’t it?

After all, they’re making sure you’re able to afford your payment based on how much you’re making!

So, what’s going wrong with the process?

CFPB ombudsman, Seth Frotman, said, “Despite having the right to an income driven plan, borrowers still struggle to enroll. Generally, processing your application should take no more than two weeks. However, many borrowers have told us that their applications sit under review for months at a time.”

Payments on a standard repayment plan are generally higher than those on a income driven plan. So you might be more susceptible to falling behind or having your loan go into default if you haven’t checked out an income driven plan yet. Student loan servicers will be more likely to guide your loans into a forbearance rather than educate you on the advantages of the income driven repayment plan.

In other words, instead of doing their job and doing what would benefit you, the borrower, your student loan servicer is actually doing the opposite and giving you options that could be keeping you in debt longer.

That’s what’s wrong with this process.

What this CFPB report shows us, is that we can no longer depend on our student loan servicers to do what is actually right for us. Whether servicers are intentionally refusing to do what is right for borrowers by enrolling them into income driven plans, or they’re just flat out bad at their jobs, there have been overwhelming reports of complaints by consumers about their servicers.

So, it’s important for you to, as a borrower, to become aware of the options available to you before going to your servicer. Don’t make the mistake of sitting back and thinking your loan servicer will do the work for you. If this report has taught us anything it is that your servicers aren’t doing that now and they have no reason to start. It is up to you to do the research and find out if these plans are right for you.

Luckily for you, everyone here at USSLC is an expert on the different plans available to student loan borrowers.

We’ll give you the education that your servicer won’t, and help you make the best decision based on your personal circumstances. Do yourself a favor and take the time to do this. You will gain nothing but valuable information about your current situation and the options that you could benefit from.

Have any student loan servicer horror stories? Let’s hear em! Tell your story in the comments or click the “Yes, My Servicer is Useless” Button above to get help from a Senior Student Loan Counselor.