What if your student loan servicer gave you wrong information?

What has the government itself found about servicers?

The guidance the Justice Department wrote for its own attorneys, together with the Department of Education, sets out problems that federal agencies have documented in how student loans were serviced.1

• Department of Education studies showed that servicing was plagued at times by administrative errors and by confusing and inaccurate information, which may have affected how borrowers responded to their loans.1
• The Consumer Financial Protection Bureau found that borrowers were wrongfully denied enrollment in income-driven repayment plans and that monthly payments were calculated inaccurately.1
• The Bureau also found that servicers falsely told borrowers their loans could never be discharged in bankruptcy.1

The guidance adds that these problems have left borrowers with a lack of trust in the repayment process.1

What are government attorneys told to do about it?

In a case about a federal student loan, the government's attorney reviews whether you made good faith efforts to repay. The guidance gives specific instructions for situations that servicing problems tend to create.1

Where does this fit in a discharge case?

Government attorneys recommend a discharge when three conditions are met: you cannot repay now, that is likely to continue, and you acted in good faith in past attempts to repay. Servicer errors matter for the third one.1

Good faith can be shown by a single step, such as making a payment, applying for a deferment or forbearance, responding to a servicer, or engaging with a third party you believed would help you manage the debt.1

This does not replace the other conditions, and it has limits. The guidance says a debt should not be discharged if the borrower willfully contrived a hardship or abused the student loan system. The government's position also does not bind the bankruptcy court, which makes its own decision.1

What should you write down?

Specifics are more useful than a general complaint. For each contact you can remember, note these points.

1. When you contacted the servicer, or when it contacted you.
2. What you were told, as close to the actual words as you can manage.
3. What you did as a result.
4. What turned out to be true.

If you were told that student loans can never be discharged in bankruptcy, say so plainly. That is one of the false statements the Consumer Financial Protection Bureau found servicers making.1

For a defaulted loan held by the Department of Education, you can also ask for copies of its documents about your debt, including records of payments and correspondence.2

Where does it go on the attestation form?

The part of the form on past efforts to repay asks how many times you tried to contact your servicer, collector or the Department of Education about your options, and what you did to enroll in an income-driven repayment program.3

A separate item is for people who did not enroll, so they can give their reasons. Another asks for any other facts showing good faith. Those are the places for an account of wrong information or a wrongful denial.3

The form is signed under penalty of perjury, so keep the account accurate and stick to what you remember.3

How do you file a complaint against your student loan servicer?

There are two official channels. Federal Student Aid takes feedback online about problems with loan discharge and forgiveness, payments, repayment plans and loan status. You can upload supporting documents, its page describes resolution within 60 days, and if you disagree with the result you may have the option to escalate the case.4

The Consumer Financial Protection Bureau accepts complaints about student loans and forwards each one to the company for a response. It says companies generally respond in 15 days, and in some cases give a final response in 60 days.5

A complaint also creates a dated record, which is useful whatever you decide to do next.