Student Loan Servicer Abuses, another recurring topic.
Jillian Bergman on the MarketWatch site:
student loan servicers — the companies hired by the federal government to help borrowers manage their debt — create confusion and make paperwork errors that keep borrowers from reaping the program’s benefits.
Well, the incentive is for the servicer to get lenders into default, then they make more money. Somehow, the government never seems to learn that folks and institutions respond to monetary incentives.
The thinking is, that servicers have to do more work on defaulted loans, so they should get paid more for that work.
No benefit to telling student loan borrowers that the balance of their student loans are/will be forgiven under PSLF. (Public Service Loan Forgiveness)
The lawsuit highlights some of those fears. According to the complaint, PHEAA didn’t process borrowers’ paperwork in a timely fashion, and pushed borrowers into forbearance — a status that pauses payments on loans, but doesn’t count towards forgiveness. In addition, when a borrower is in forbearance interest capitalizes on their loan.
Navient – Who Else?
a trio of lawsuits filed in January by the U.S. Consumer Financial Protection Bureau and state attorneys general of Washington and Illinois. They collectively allege Navient mistreated hundreds of thousands of student debtors by taking shortcuts to minimize its own costs, while adding what the CFPB said was as much as $4 billion in interest charges to borrower loan balances.
Shahien Nasiripour writes in a Bloomberg story.
Maybe another name change? Navient used to be Sallie Mae, which got such a bad rep that it changed to Navient.
Navient illegally steered struggling borrowers facing long-term hardship into payment plans that temporarily postponed bills (while interest continued to accrue), the officials alleged, rather than helping them enroll in federal programs that cap payments relative to their earnings and offer the promise of loan forgiveness. Navient has denied the allegations.
See above: “Well, the incentive is for the servicer to get lenders into default, then they make more money.”
I hate to repeat myself, but, student loan servicers keep repeating the same abuses.
Vultures Who Claim They Help You With Student Loan Servicers
As with the mortgage crisis, and its scam artists claiming they could save you from foreclosure, student loan servicer abuses have plowed new fields for the con men and scammers:
Probably many of the same people who were scamming consumers on mortgage relief.
When in doubt, contact an expert.