Tips for student loan borrowers
We frequently hear from borrowers and cosigners, including veterans and servicemembers, who are working hard to stay on track and pay off their student loans but are struggling to get the information and the help they need from their student loan servicer. With this in mind, we put together these tips to help consumers tackle their student loan debt.
First, make sure you know who your student loan servicer is.
Your student loan servicer is the company that sends you your bill each month. Servicers are private companies that are responsible for managing borrowers’ accounts, processing monthly payments and communicating directly with borrowers. If you are experiencing financial hardship, like unemployment, you can contact your student loan servicer to learn about alternative repayment plans or any deferment or forbearance options that may be available.
Here’s how you can find your student loan servicer:
- Review the monthly statement you receive detailing how much you owe on your student loans. Your servicer should be listed as well as contact information on how to reach a representative.
- If you are a federal student loan borrower, log in to My Federal Student Aid for the name and contact information for your servicer.
- If you have a private student loan, try checking your credit report. You can get a free copy of your annual credit report at annualcreditreport.com .
Once you know who your servicer is, here are some tips that can help keep you on track:
1. Protect yourself and your money by giving your servicer specific instructions on how to allocate your extra payments. If you have several loans associated with the same loan servicer, and you don’t provide instructions, your servicer will generally decide how to allocate your payments in excess of the amount due. Providing your servicer with instructions on how to allocate this extra money can save you hundreds of dollars or more in extra interest and may help you get out of debt faster. Check out our Consumer Advisory that provides a sample instructions template that you can download and send to your servicer.
2. If you are struggling to make your monthly payments on a federal student loan, you have the right to apply for a repayment plan that can adjust your monthly payment based on your income. For federal student loan borrowers: The Department of Education offers numerous plans to borrowers with federal student loans, including income-driven repayment (IDR) options that can adjust your monthly payment to as little as 10 percent of your discretionary income. To start making payments under an IDR plan, enroll online at StudentLoans.gov .
For private student loan borrowers: Contact your servicer and ask what options may be available to you. Many companies say that they have alternate payment programs for borrowers who might not be able to make a full payment. Asking for help when you run into trouble can keep you from falling further behind.
3. If you are a veteran or servicemember, make sure to understand your rights, protections and resources available to you as a student loan borrower and member of the military community. Our “Tackling student loan debt” action guide details the various options for servicemembers that can help them tackle their student loan debt, ranging from details about the various IDR options for federal student loans to zero percent interest for certain student loans due to service in an area of hostile fire. Additionally, under federal law, veterans with a service-connected disability can seek discharge (forgiveness) of their federal student loans if they received a 100-percent disability rating from the Department of Veterans Affairs (VA). If you think you might qualify for a Total and Permanent Disability discharge of your federal student loans, the Department of Education has more information on how to apply .
4. Make sure to understand your rights and responsibilities as a student loan co-signer. As a co-signer, you’re not merely vouching for someone’s ability to repay a loan; you’re also taking full responsibility to pay back the loan. If you co-sign, you’re responsible for making the monthly payments, and you will be asked to pay if the primary student loan borrower stops paying the loan. If you are a co-signer or have a student loan with a co-signer and you are in repayment, make sure you understand your options for co-signer release. Check out our consumer advisory for more information.
5. If you are having trouble with your student loans or with your student loan servicer, submit a complaint. You can submit a complaint about a private student loan or about the servicer of your federal student loan online or by calling (855) 411-2372. We will forward your complaint to the company and work to get a response.
6. Steer clear of debt relief scams. Problems with servicing can leave distressed borrowers without the tools to help them avoid default. Student debt relief scams prey on these borrowers, charging up-front fees while promising to enroll borrowers in free federal consumer protections including income-driven repayment plans. Check out our Consumer Advisory to learn more about the warning signs about student loan debt relief company practices.
The CFPB is committed to working to improve the student loan servicing market. The Bureau has and continues to take legal action against student loan servicers for illegal student loan servicing practices and continues to monitor trends in student loan servicing complaints.
If you have questions about repaying student loans, check out our repayment tool, Repay Student Debt, to find out more about how you can tackle your student loan debt.
Seth Frotman is the CFPB’s Student Loan Ombudsman. To learn more about our work for students and young consumers, visit consumerfinance.gov/students.
Paul Kantwill is the CFPB’s Assistant Director for the Office for Servicemembers Affairs. To learn more about our work for servicemembers, visit consumerfinance.gov/servicemembers.