Each Monday we’re tackling one of your pressing personal finance questions by asking a handful of money experts for their advice. If you have a general question or money concern, or just want to talk about something PeFi-related, leave it in the comments or email me at [email protected]
This week’s question comes via email from Brian:
I’m in repayment, and am writing to see what laws are out there to protect borrowers? I’ve had my loans transferred to a few servicers through the years, and my current servicer has only given me credit for six months of the three years I paid into [Public Student Loan Forgiveness], and have taken a year and counting to “reinvestigate” my payment history. I plan on writing complaints to the [Consumer Financial Protection Bureau] and my state attorney general, but don’t know of anything I can point to, legally, to strengthen my claim.
This is what individual experts have to say generally about an issue that affects each person differently—if you want personalized advice you should see a financial planner.
Make Sure You’re Actually on Track
This is a very frustrating but, unfortunately, all too common occurrence. In fact, many of your emails and comments were simply inquiries into how to ensure student loan servicers are tracking your information correctly.
We’ll get more into the nitty gritty of the Public Student Loan Forgiveness Program tomorrow. For today, in answer to your question, there are unfortunately not that many protections for consumers as far as federal laws go.
And while you can file a complaint (more on that in a bit) first things first: You really need to double (and triple) check that you actually are enrolled in PSLF and meet the stringent qualifications:
- You have federal Direct Loans (if you don’t know what repayment plan you’re in, log in to My Federal Student Aid). Private loans cannot be forgiven. If you have federal loans, you can see a list of them and who your servicer is on the National Student Loan Data System’s website.
- Qualifying repayment plans include income-based repayment plans.
- You have make 120 qualifying monthly payments under a Direct Loan plan (they do not need to be consecutive). You can see how many qualifying payments you’ve made here.
- You must have worked full-time for all 120 payments (meaning “you meet your employer’s definition of full-time or work at least 30 hours per week, whichever is greater”).
- You need to work for a federal, state, local or tribal government organization or a 501(c)(3) non-profit (the American Bar Association is currently suing the Department of Education about the 501(c)(3) aspect of this).
- You should fill out and submit the Employment Certification form every year to make sure you’re on track (and every time you switch employers to ensure you still qualify).
- After you’ve made your 120 payments, you need to submit this form to actually receive forgiveness.
Experts I talked to said it’s important to tell your servicer that you want to be in an income-based repayment plan because there’s no incentive on their end to just put you into one (it doesn’t make them much money). “If the servicer seems unsure, hang-up and call back to talk to someone else,” says Mark Kantrowitz, a student loan and financial aid expert. And you need to proactively check once or twice a year to make sure you’re still on track—no one’s going to do it for you.
Oh yeah, and don’t forget to read your mail or spammy-looking emails from your student loan servicers. There’s probably crucial information in there.
File a Complaint
If it turns out that your servicer screwing you, there’s not a ton of recourse. But here’s what you can do:
“Gather records that show when you made each payment on your loans, as well as records concerning when you filed the annual recertification paperwork to provide your income information to the servicer,” says Kantrowitz.
Paperwork is the key component here. If you’ve been repaying your loans for a while, you may not have been cataloguing all of your paperwork over the years, which makes it really hard to prove anything, says Leslie H. Tayne, an attorney and student loan debt expert.“When you have a student loan you have to keep track of it yourself and not rely on the other party. Document every payment and every correspondence. Keep really good files,” says Tayne. “They lose payments, and you need to prove how it happened.”
In addition to filing a complaint with the CFPB’s online complaint system, Kantrowitz also says to file one with the U.S. Department of Education’s feedback system, because the CFPB and U.S. Department of Education do not share complaints with each other. You can also file a dispute with the FSA Ombudsman.
But if you’ve been paying attention, you know that the CFPB and the Department of Education are not focusing on consumer protections right now—in fact, they appear to be actively working against constituents’ best interests. So you’ll want to look to state protections. Of course, those vary, so where you live will play a big role in what your options are.
If it comes down to it, you can hire an attorney and sue, in which case you’d better make sure you have all of your paperwork and records of payments. That might not even mean litigation, but rather having an intermediary to settle the terms for you.
Lobby Your Representatives
Mortgages servicers are regulated by the Real Estate Settlement Procedures Act, and credit card companies are regulated by the Credit Card Accountability Responsibility and Disclosure Act, both of which set strict requirements for servicing. But there’s nothing comparable for student loans, which are governed primarily by the Higher Education Act.
“In terms of actually processing payments correctly and what kind of recourse borrowers have when payments get lost, those are missing and it’s a big problem,” says Persis Yu, an attorney at the National Consumer Law Center and director of the Student Loan Borrower Assistance Project.
So if you really want to improve accountability, then lobby your representatives. There are countless industry lobbyists talking to your Congressmen and women every day, so you need to make your voice heard, too.
But you’ll need to go further than that. “There are a lot of bills that haven’t been successful, but have been initiated by constituent concern,” says Travis Hornsby, the founder of Student Loan Planner. “This is not a super partisan issue so they might be more willing to listen.”
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How to Know If You Qualify for Public Student Loan Forigveness have 1331 words, post on twocents.lifehacker.com at April 9, 2018. This is cached page on Talk Vietnam. If you want remove this page, please contact us.