Updated: Apr 4
During these ever-changing times where thousands of borrowers and members of Congress are hoping that Biden will cancel student loans, the exact method for how to get student loan cancelled fairly and not lean heavily on letting high earners off the hook keeps emotions high on both sides in the public eye.
While there has been no decision announced about the future of discharge, forgiveness or cancellation, one fact is universally accepted. understanding the student loan industry can be extremely confusing.
When students attend school, not much information is provided regarding how it works, or which repayment options are available when applying for financial aid, attending school or even during graduation.
TitanPrep would like to provide you with an easy-to-understand summary of the different parties currently involved in the industry and how they relate to each other -and you.
DOE – Federal Student Loan Lender
When you, the BORROWER, originally went to school and applied for federal loans, that money came from the Department of Education. This means the DOE is the LENDER of your loans. If you do not enroll in an alternative program, you will automatically be placed on a standard 10-year repayment plan, after an automatic 6-month forbearance for student loans, called the “grace period”, which begins once you graduate or leave school.
All your loan information is maintained in the National Student Loan Data System. The National Student Loan Data System
(NSLDS)“ This is the national database of information containing all information pertaining to loans and grants awarded to students under Title IV of the Higher Education Act (HEA) of 1965. NSLDS provides a centralized, integrated view of Title IV loans and grants during their complete life cycle, from aid approval through disbursement, repayment, deferment, delinquency, and closure.” There have recently been several nslds scams. Always be cautious when sharing any of your personal information.
The DOE assigns your loans to a private bank to manage your repayment program and report all related information back to the NSLDS. That bank is called your “LOAN SERVICER”.
What Loan Servicers Do
A loan servicer is a private bank that is assigned to handle the billing and other services on your federal student loan on behalf of the DOE and report that information back to the NSLDS.
This relationship can be illustrated as similar to a creditor on your consumer credit report sending information regarding your payment history back to a credit reporting agency. (For example, a Bank of America credit card payment (your SERVICER) being reported to a consumer credit agency such as Equifax or Transunion (NSLDS).
Your loan servicer is NOT a part of the DOE but accepts payments and assists borrowers to enroll in repayment programs.
FedLoan Servicing (PHEAA) (Leaving)
Granite State – GSMR (Leaving)
Great Lakes Educational Loan Services
Understanding Loan Servicer Transfers
In some cases, the DOE needs to transfer loans from one servicer to another servicer. For instance, FedLoan has been the only federal loan servicer that handles Public Service Loan Forgiveness (PSLF) applications, which provide student loan forgiveness, and the processing of employment certification forms. Once your PSLF application is processed, your loans will be automatically transferred to FedLoan. You can access the studentaid.gov pslf calculator here to help you determine your current standing in the Public Forgiveness Program. Recently FedLoan Servicing announced that they will be exiting the industry at the end of 2022. If Fedloan has been your servicer, your account will soon be transferred from Fedloan to Mohela. If you have not received notification regarding the transfer you may want to follow up regarding the current status of your account before the end of the Covid forbearance at the end of December 31, 2022
If they transfer your federal student loans from one servicer to another servicer, your loans will still be owned by DOE. The “transfer” to another servicer simply means that a new servicer will provide the support you need to fully repay your loans.
Potential Conflicts of Servicer Interests
The challenge with this dynamic, in general, is that private banks are in business to collect interest and payments for as long as they can, not in the business of guiding you through decisions and tracking the best repayment program for each individual borrower. Also, like consumer credit reporting, errors in reporting can and do occur.
The primary complaint from borrowers about servicers is that they receive inaccurate information regarding their loans when they contact their assigned servicer. This was followed by issues regarding how their payments are handled and reported back to the NSLDS. Errors in reporting have been a major cause of denial of discharge when borrowers apply for forgiveness at the end of their program.
Multiple student loan servicing companies have been embroiled in lawsuits and allegations from states like Pennsylvania and New York, as well as the Consumer Financial Protection Bureau.
In 2017, the Consumer Financial Protection Bureau (“CFPB”) sued Navient Corporation (“Navient”), Navient Solutions, Inc. and Pioneer Credit Recovery, Inc. for alleged predatory lending practices, claiming that it steered borrowers into forbearance rather than discussing income-driven repayment (“IDR”) plans.
Also In 2017, Massachusetts Attorney General Maura Healey sued PHEAA, which does business as FedLoan Servicing, accusing it of deceptive practices that caused public servants to lose benefits and financial assistance under two federal programs.
New York Attorney General Letitia James also sued PHEAA in 2019, after the Department of Education’s inspector general criticized that agency for not taking action against PHEAA / FedLoan and other servicers for their mistakes.
Nevertheless, you can choose to deal directly with your servicer bank to handle your loan repayment. If you do, it is your sole responsibility to figure out how things work, monitor and comply with regulation changes.
You will also need to submit, track and verify the accuracy of your loan payment records then archive your annual paperwork as proof for when you eventually file for discharge at the end of your 10-25 year program. You also have the option of hiring professional assistance to help you.
Third Party Assistance - Paying for the Help You Need vs. Getting Scammed
Imagine if a tax prep company told you the only way to get your tax refund was to pay them to complete and file your tax return. The truth, as most people know, is that of course you can always choose to do your taxes yourself, for free.
But many people find the process of researching, computing, and filing their own taxes confusing and time-consuming, so they hire a tax accountant, visit their local tax preparation store, or pay for third party doc prep solutions.
They might find that the service pays for itself in the time and frustration it saves them. They may even owe less in taxes because of that company's expertise—more than offsetting the tax prep fee they choose to pay—by acquiring professional help.
Legitimate student loan assistance services exist to help borrowers evaluate their student loan repayment options and apply for the program that best suits their needs.
There are a whole host of legitimate private assistance companies that are not affiliated with the Department of Education that can and do provide you with support, knowledge, and updated information regarding the programs available through your loan servicer. They can also help to monitor and prevent reporting errors, avoiding costly mistakes when repaying your student loans.
TitanPrep has proudly assisted thousands of customers annually with student loan document preparation and a full suite of services for over half a decade. Unfortunately, there are bad actors in this industry involved in national student forgiveness scams, but we proudly maintain an A-rating with the BBB and a 4.9 rating on Google Reviews. But TitanPrep offers much more than only federal document preparation services. Our data storage services provides our clients one centralized location to store all of their records in allowing them to build their complete portfolio required to successfully submit for discharge at the end of their program, if they choose to apply.
Our Monitoring service includes our proprietary titan student portal. Monitoring and tracking services verify the databases which are relied upon to determine discharge eligibility and are also where reporting errors can occur. Email correspondence periodic loan pulls and payment records are also included. With your authorization, we communicate on your behalf with your loan servicer and conduct 3rd party servicer follow up. We then review and update all recorded information to ensure reporting accuracy. Any errors discovered by the TitanPrep team are immediately reported to the client and corrected. Our streamlined process will make your case simple and stress-free, with easy step-by step-guidance to achieve fast results.
Your Loans Your Choice
Once your “grace period” forbearance for student loans ends, you are ultimately responsible for the repayment of your federal student loans. Whether you manage your account directly with your servicer or hire third party assistance, just like your taxes, it will be you who is held responsible for the outcome of the effort- until the time the Ed Department possibly chooses to cancel student loans. Whether you choose to manage your account directly with your servicer, or you hire a third party expert such as TitanPrep to assist you with federal document preparation services,at least now you know who is who in this industry.
Contact TitanPrep Customer Service today at (657) 204-6797 if you have questions or would like assistance.