Student loan servicers, the companies that manage $1.4 trillion in federal and private loans, haven’t been earning much trust among borrowers.
Sixty-four percent of the 44,400 student loan complaints the Consumer Financial Protection Bureau collected between July 2011 and March 2017 involved problems borrowers had with their lenders or servicers, including not informing them about repayment options. That was almost double the number of complaints borrowers made about unaffordable loan payments.
You can often switch your private loan servicer by refinancing with another lender. But switching federal loan servicers is more complicated: You can only do so by consolidating multiple loans into a federal direct consolidation loan, and there are drawbacks to this process. If you don’t know your servicer, find out at the Federal Student Aid website. There are nine federal servicers, but the Department of Education is moving toward using only one.
Because your servicer might not share all the details, it’s important to know your repayment and forgiveness options. Here are three things to keep in mind.
Lower your payments
The default 10-year plan is the best way to repay federal loans without incurring additional interest. If you’re falling behind on your bill, avoid temporarily halting payments with deferment or forbearance. Neither option will address your debt, and your loans can still incur interest, which means a bigger balance once the postponement period ends.
Instead, consider these federal repayment plans :
