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3 Things Your Student Loan Servicer Might Not Tell You

With the cost of college skyrocketing over the last several decades, students are accumulating massive debt as they work towards their graduation date. The federal government depends on private companies to manage millions of student loan accounts each year, but these student loan servicers may not be giving you all the facts about your loans. According to the Consumer Financial Protection Bureau, 64 percent of the 44,400 student loan complaints collected between July 2011 and March 2017 concerned problems borrowers had with their lenders, including the lenders not informing them about repayment options.

Your lender might not share all the important details with you about your loans, so it’s important to be aware of your options when it comes to loan repayment and forgiveness. Here are three things your student loan servicer might not be telling you.

1. You Can Lower Your Payments

If you are falling behind on your monthly loan payment, avoid temporarily stopping your payments with deferment or forbearance. These options don’t address your debt, and your loans will still accumulate interest, meaning a larger balance for you once the postponement ends. Consider these federal repayment plans instead, but remember that the longer you extend your repayment term, the more interest you will accumulate:
Graduated Repayment: With this plan, you start off with lower payments than a standard plan, but they increase every two years. This is a great option if you expect your income will increase over time.
Extended Repayment: If you qualify for this plan, you pay graduated or fixed amounts with an extended period of up to 25 years.
Income-Driven Repayment: There are four income-driven plans and each of them caps your monthly payment between 10 and 20 percent of your discretionary income and increases your term from 10 years to 20 or 25 years.

2. Loan Forgiveness Is Not Always the Answer

There are currently four federal student loan forgiveness programs: income-driven repayment forgiveness, Teacher Loan Forgiveness, Public Service Loan Forgiveness, and Perkins loan cancellation. Even if you meet some of the qualifications, your repayment plan could exclude you from some of these programs. For example, Public Service Loan Forgiveness cancels your remaining balance on direct loans after 120 qualifying monthly payments made while working full-time for an eligible employer. However, you must be enrolled in a standard repayment plan or income-driven repayment plan. Payments made on an extended or graduated plan don’t count towards the 120 monthly payments.

3. Recertify Your Income

Qualifying for income-driven repayment means you must recertify your income and size of your family with your student loan servicer each year. If your income increases, your loan will too. On the other hand, if your income decreases or your family size changes before your annual recertification, remember to submit the updated information and request an immediate payment recalculation. If you don’t do this, you may pay more than is required. Here’s more information on how to recertify your income-driven payment plan each year.

Do You Have Student Loan Servicer Disputes?

Brendan A. Sweeney, Esq. of Sweeney Law P.A. represents consumers who have issues with their student loans. Our dedicated team has the expertise to help you with your student loans, no matter what your specific situation is. If you are seeking a student loan lawyer in Broward County, contact Sweeney Law, P.A. today at (954) 951-8727.

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