College education opens doors to opportunity. In fact, a recent TR Research Study showed that graduates ages 25-30 working full time earn about $17,500.00 more annually then peers who had only finished high school. Unfortunately, when it comes time to pay back your student loans, student servicers can make your financial situation worse then a high school graduate.
What’s a Student Loan Servicer?
A Student Loan Servicer collects loan payments on loan, responds to customer service questions and perform tasks for maintaining the loan. The loan servicer will disburse your loan, process the request for deferments and for forbearances and keep your loan records. They are supposed to be working with struggling borrowers to find repayment options. That, unfortunately, is just not the case!
Consumer Financial Protection Bureau Report on Risking an Illegal Student Loan Servicer.
The Consumer Financial Protection Bureau (CFP) issued a report in October of 2014 outlining the 6 things the Student Loan Servicer commonly do that are risky or illegal:
· Allocating payments to maximize late fees.
It’s not unusual for a servicer to handle multiple student loans for each student loan borrower. They’ll combine all of your student loans into one combined account. When they allow you to make a single payment for all of the loans, the servicer will allocate the payment among the borrower’s loans to satisfy the monthly payment for each one. If you make a payment that is less then the total amount due, it’s not uncommon for servicers to allocate an amount proportionally to each loan, which results in you getting charged the minimum late fee on all of the loans and all of the loans becoming delinquent. This is illegal under the Dodd Frank Act.
· Misrepresenting Minimum Payments:
Many servicers inflate the amount of minimum payments that are due on periodic statements and include amounts that are in deferment and not actually due. That’s deceptive isn’t it?
· Charging Illegal Late Fees:
Many student loans have grace periods. If your payment is received after the due date but during the grace period, late fees are not supposed to be charged. However, it’s not uncommon for servicers to unfairly charge late fees when payments are received during the grace period that is unfair and deceptive under the Dodd Frank Act.
· Failing to provide accurate tax information:
You can deduct your student loan payments on your income tax return. Unfortunately, servicers can make it difficult for you to get that information and even misrepresent the information on your online account statement. This can result in you losing up to $2,500.00 in tax deductions. The failure to provide you with correct information is an unfair and deceptive practice under the Dodd Frank Act.
· Misleading Consumers About Bankruptcy Protections.
Some servicers have told consumer student loan borrowers that their loans are not discharged in bankruptcy. All that may be generally true, it is possible to bring all due hardship claim in bankruptcy court.
Student loans can be discharged for many reasons including permanent and total disability and public service employment. Misleading consumers is deceptive under the Dodd Frank Act.
· Making Illegal Debt Collection Calls to Student Loan Borrowers at Inconvenient Times.
The Fair Debt Collection Act limits when a servicer or collection agency can call a delinquent borrower. They are not allowed to call early in the morning, late at night, harass you at work. Those types of calls will violate the FDCA and are unfair under the Dood Frank Act.
What Should I Do If I’m Behind in My Student Loan and Defaulted?
You’ll need to get your loan out of default and into an income based payment plan.
Contact the Student Loan Resolution Center Law Office to learn more about how you can get a road map for dealing with your student loans. Don’t let student loan servicers mislead you! After all, they are not in the business of helping you. They are in the business for making money for themselves! Call today at (727)828-9955.