Discovering and Resolving Student Loan Servicer Errors: A Guide for Borrowers | Bill Clanton

Discovering and Resolving Student Loan Servicer Errors: A Guide for Borrowers

Student loan borrower frustrated by confusing paperwork and loan servicer errors.

Don’t Let Student Loan Servicing Errors Cost You – Learn How Borrowers Spot and Fix Them

As a student loan borrower, ensuring your loan servicer is handling your account correctly is crucial for staying on track with repayment and avoiding costly mistakes. Servicing errors by the companies managing federal student loans for the Department of Education are unfortunately common. This article will teach you how to identify student loan servicer errors so you can get them fixed and prevent harm to your finances.

What are the most common student loan servicer errors?

Student loan servicers manage billing, repayment plans, and other aspects of your federal student loans. Common servicing errors include:

  • Incorrect student loan payment amounts or due dates
  • Failure to process income-driven repayment plan enrollments or recertifications
  • Not applying payments properly to your account
  • Providing inaccurate information about repayment options
  • Mishandling requests for deferment or forbearance
  • Issues related to loan forgiveness programs

These servicing mistakes can lead to missed payments, incorrect loan balance, negative credit reporting, loss of eligibility for certain programs, and paying more than you should over time.

How can I tell if my student loan servicer made a mistake?

Spotting errors requires carefully monitoring your student loan account. Some red flags that your servicer may have made an error include:

  • Unexpected changes to your monthly payment amount
  • Payments not being applied to your balance correctly
  • Missing or incorrect information on billing statements and other correspondence
  • Being steered into forbearance instead of an income-driven repayment plan
  • Receiving inaccurate information from customer service representatives

If something doesn’t seem right with your account, don’t ignore it. Investigate further to get to the bottom of the issue.

What should I do if I think my loan servicer made an error?

At the first sign of a potential servicing mistake, get a copy of your credit report. Annual Credit Report is the best, and should be the only place you get your credit report. Armed with what they are saying o your credit report, contact your loan servicer. Call customer service, and record the call. Document the date, method of communication, and what was discussed. Ask for proof in writing. 

Clearly explain why you believe there was an error and what you need the servicer to do to correct it. Refer to any relevant documentation like payment records, income certification, or correspondence.

If your servicer is not responsive or fails to resolve the issue, file complaints with:

Complaining creates a paper trail and often gets your issue reviewed by higher-level staff who are more capable of fixing servicing errors.

If the errors are on your credit report, you need to send a written dispute to each bureau that is reporting it. Include all the proof you obtained above. Send it certified mail. 

How can I prevent student loan servicing mistakes?

You can reduce the likelihood of harm from servicing errors by being proactive. Best practices include:

  • Sign up for an online account with your servicer to easily monitor your loan
  • Review billing statements every month and keep records of all payments
  • Regularly check that your servicer has your current contact info on file
  • Submit requests and applications well before deadlines
  • Opt for email communication to create a digital paper trail
  • Learn about your rights and repayment options as a borrower

Careful oversight of your student loan account can help you catch servicing issues early before they snowball into bigger problems.

What are some examples of student loan servicer errors?

Real-world examples of servicing mistakes abound. In 2021, the Education Department revealed that loan servicers had failed to count qualifying payments toward Public Service Loan Forgiveness for many borrowers.

A 2017 CFPB report highlighted “widespread servicing failures” at both federal and private loan servicers, including misapplying payments and botching repayment plan processing. Ongoing oversight efforts continue to uncover rampant servicer errors.

Can I get compensated for financial harm from servicing errors?

If you suffered financial damages due to your student loan servicer’s negligence, you may be able to recover compensation. Potential remedies include:

  • A refund of overpaid interest or fees
  • Correction of negative credit reporting
  • Reimbursement for denied credit or employment opportunities
  • Getting loan payments properly counted toward forgiveness
  • In some cases, discharge of your loan

Getting compensated typically requires persistent follow-up with your servicer and complaints to outside agencies. If your servicer still won’t make you whole, consult a consumer protection attorney about possible legal action.

How do I contact the Department of Education about student loan problems?

The Federal Student Aid Ombudsman Group is a neutral resource to help resolve servicing issues you can’t work out with your servicer directly. You can reach the Ombudsman at:

Phone: 1-877-557-2575 Fax: 606-396-4821 Mail: FSA Ombudsman Group, P.O. Box 1854, Monticello, KY 42633

To expedite your case, first try filing a complaint via the FSA Feedback Center at The Ombudsman Group will research your concern and work with your servicer to address it.

Will the Department of Education give servicers a “free pass” for errors?

According to the head of Federal Student Aid Richard Cordray, the Biden administration intends to hold student loan servicers accountable for costly mistakes and misconduct.

In a speech to servicers, Cordray said “Servicers who do not meet our performance expectations will face consequences” and that the Department will “not give student loan servicers a free pass when it comes to gross servicing failures that hurt borrowers.”

Policymakers and law enforcement are increasingly taking action against negligent loan servicers, but you’re still your own best advocate when servicing errors arise. Knowing how to identify and resolve them is key.

What happens if my servicer doesn’t resolve my issue?

If you’ve complained to your servicer and the Department of Education but still can’t get your student loan servicing error fixed, you have options:

  • Consult a lawyer: A student loan or consumer protection attorney can assess whether you have a valid legal claim against your servicer and advise you on next steps. Many offer free consultations.
  • Congressional intervention: Contacting the office of your U.S. Representative or Senators can prompt inquiries to your servicer or the Department on your behalf. Congressional caseworkers have resolved many borrower issues.
  • Go public: If you’re willing to share your story, bringing media attention to your servicing problem can spur your servicer to address it. Consider contacting national or local news outlets, or posting on social media.

Don’t give up if your initial efforts to resolve a servicing error are unsuccessful. With persistence and utilizing outside help, you can get your student loan back on track.

How do I submit a complaint about my student loan servicer?

To formally raise your concerns about student loan servicing errors or poor practices, you can file complaints with:

  • Department of Education FSA Feedback Center:
  • Consumer Financial Protection Bureau:
  • Your state Attorney General’s office
  • Your state consumer protection agency
  • Your U.S. Representative:
  • Your U.S. Senators:

When submitting complaints, provide documentation of the servicing error and your attempts to fix it, and clearly state the resolution you’re seeking. Filing complaints creates a paper trail and can pressure your servicer to address your concerns.

Take Control of Your Student Loans by Watching for Servicing Errors

As a student loan borrower, you’re your own best advocate for ensuring your loan servicer manages your account properly. Costly servicing errors are all too common, but you can identify and resolve them by:

  • Monitoring your student loan account regularly
  • Contacting your servicer at the first sign of a mistake
  • Escalating unresolved issues by filing complaints
  • Knowing your repayment rights and options
  • Keeping careful records
  • Tapping outside help if needed

If you believe you’ve suffered financial harm from a student loan servicing error, Clanton Law Office may be able to help. Our experienced attorneys assist borrowers in recovering compensation for servicer negligence and misconduct. Contact us for a free consultation to discuss your situation and legal options.

About The Author

Bill Clanton

Over the years my office has helped thousands of consumers who were cheated, ripped-off, and mistreated by debt collectors, credit reporting agencies, banks, credit unions, and car dealers. If you have a problem with a business being dishonest with you give me a call. Iā€™d love to set them straight.