5 Tips To Protect Yourself From Upcoming Servicer Changes

5 Tips to protect yourself from the major servicer changes coming this December.
In a previous post, we covered the Department of Education’s massive overhaul of the federal student loan servicing system and what borrowers can expect moving forward. For those who have not read the article yet, you can find it here.
For those who have read the article, let’s jump right in.
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Download All Payment Records
One of the most common and prevalent challenges that consumer advocates face is a lack of accurate record keeping. It is highly advised that borrowers keep personal records of communications, payments and any other changes made to their accounts. Too many times I have had representatives from loan servicers claim that they “never received those documents”, only to “find” them later after a brief review of the account. Without proof, it can be difficult and frustrating for borrowers to show that they HAVE in fact made payments on their 10 year old loans. Loans which their new assigned servicer received no record of from the lender who previously serviced their loans.
In addition, banks typically only keep bank account statements documented for seven years; this means that it may not be possible to fall back on that information if too much time has passed. Most loan servicing companies allow you to download and export your payment histories and other related records; usually this comes in the form of an excel spreadsheet. It takes some time and yet it will be worth it to have in case anything happens when the loans transfer servicers.
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Retain Copies of ALL Correspondence
In addition to downloading the payment records, we suggest that borrowers keep copies of letters, notices, emails, verbal communication and other forms of electronic communication sent to them by their loan servicer. This information could be invaluable later down the road.
For example, let’s say that you were previously enrolled in an income driven repayment program with Nelnet. After the transfer, your loans and account information are transferred to MOHELA. During the transition, some of the information gets lost and MOHELA is claiming that there is nothing in your account that shows you were ever in an IDR plan. Now you face the challenge of having to prove to your new servicer that you were in fact enrolled in that program and show proof that you have made the exact amount of on-time payments made in order for them to honor that time within the IDR plan. Long story short, keep records of everything.
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Public Service Borrowers: Certify your Employment
Borrowers enrolled in the Public Service Loan Forgiveness (PSLF) program may also be impacted by the new servicer contracts. In fact, many PSLF borrowers are still struggling to get payments they made years ago to qualify for PSLF because records from their past payments may have been lost in transition during the last servicer change. For borrowers in the PSLF program, you can submit a Public Service Loan Forgiveness Employment Certification form to ensure that their non-profit or public service qualifies for PSLF. You can also get a preliminary count of all qualifying payments made to date. This application could result in your loans being transferred to Fedloan if your loans are not with them already.
- Monitor Payments and Auto-Debits
The Consumer Financial Protection Bureau noted that, “When servicers change, payments may be lost, consumers may incur surprise late fees, encounter processing problems and missing account records can knock borrowers off track on repaying their loans.” As a security measure, borrowers should monitor their online student loan accounts at least once per month to make sure that everything is accurate. If you are currently on auto-debit, be aware that after your loans change servicers, you will likely need to re-establish an automatic payment arrangement. (Which we do not generally advise clients do)
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Monitor your Credit Report
In some cases, student loan servicing transfers can result in erroneous, negative marks or delinquencies on your credit report. Monitoring your report is crucial to catching these errors early. Under the fair credit reporting act, consumers have a right to dispute any incorrect, inaccurate or fraudulent negative credit reporting and request that it be removed. You can monitor your credit report through any of the major credit bureaus; this may require a fee. You are also entitled to a free annual copy of your credit report from each of the three main bureaus.
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BONUS TIP: Reuse, Reclaim and Recycle all of your loan payments
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