How to File an Effective Student Loan Complaint

Making a complaint to your student loan lender or servicer can feel like you're shouting into the void.

The latest report from the Federal Student Aid Ombudsman details the 44,155 complaints submitted by users of the Federal Student Aid Feedback System in 2019. Loan repayment was the primary source of discontent.

Unique Outcome, Or A Shift In Their Current Circumstances

In an email, the Department of Education stated that while all complaints will be investigated and addressed, "we cannot guarantee a consumer a specific result or change in their current status." This should allow you to bring your issues to the attention of those in authority.

Ensure you have realistic expectations for the recipient before sending an angry email because they might not be what you're hoping for. However, success is achievable, provided the proper procedures are followed.

The first place to go is your lender or servicer.

Betsy Mayotte, president and CEO of the Institute of Student Loan Advisors recommends starting with your private lender or federal loan servicer for the quickest resolution.

Get in touch with a consumer advocate, ombudsman, or the claims department at the lending institution or servicing company. The company's general call center might need to learn the answer to your question or have the ability to make the modifications you need to your account.

Sending A Message To The Appropriate Party

According to Mayotte, the quickest way to deliver your message to the proper person is to send an email to the company's general customer care address. You can always trace your steps back with written letters. Though it may appear more convenient, phone calls to your lender or servicer make it more challenging to keep track of your conversations.

You must retain detailed records and a consistent storyline while filing a complaint. In addition, being specific in your request is essential, says Bonnie Latreille, director of research and advocacy at the non-profit Student Borrower Protection Center.

Promote Aid In Your Online Advertising.

She says, "any corporation can send off a form letter." However, if a borrower responds, "I have called and requested relief, and you promote relief on your website, and I want to know what is available to me," the servicer must provide details on the relief programs to which the borrower is entitled as well as copies of any necessary applications.

Complaining at a higher level

Bring your problem to the government if you need help with your lender or servicer. The Federal Student Aid Feedback System is where all unhappy borrowers of federal loans should voice their concerns. Customers with concerns about their private loans should contact the Consumer Financial Protection Bureau.

According to an email from the Education Department, you can expect a response from the feedback system within 15 days and a resolution within 60 days. If not, the Federal Student Aid Ombudsman can be contacted for more assistance.

Seek outside assistance

You can also file a complaint with your state's attorney general's office, consumer protection office, or congressional representative.

There's also no wrong time in the complaint procedure to seek guidance. Student debtors can get free advice from non-profit consumer advocacy organizations like the Institute of Student Loan Advisors.

According to Adam Minsky, a student loan expert, and attorney in Massachusetts, legal representation is available, but it may be costly. In his opinion, you should wait until you have no choice before consulting a lawyer.

Find out how to switch your financial institution or servicer.

In the worst-case scenario, you can try switching lenders or servicers.

Both federal and private loans can be refinanced through a private lender. In addition, borrowers who consolidate with the federal government can choose a new servicer.

But refinancing federal loans costs you benefits such as income-driven repayment options and prospects for forgiveness, and consolidation boosts the amount you repay overall.

If possible, stick with your current servicer and go through the proper methods for filing complaints and disputes.

Your complaints matter

Ex-CFPB student loan ombudsman Seth Frotman believes complaints are essential and not simply for resolving an individual issue.

"At practically every law-enforcement agency or regulatory agency, this is how they see trends; this is how they notice what's going wrong in the markets," says Frotman, now executive director of the Student Borrower Protection Center.

For example, in 2017, the CFPB sued the federal loan servicer Navient based on borrowers’ complaints about its loan management methods. The actions taken by the CFPB were followed by similar lawsuits against Navient filed by state attorneys general.

However, "mistakes aren't usually one-off instances," as Frotman puts it. When something terrible happens to you, it's probably happening to tens of thousands, if not hundreds of thousands, of other individuals.