When paying off your student loans, there’s one thing you don’t want; late fees. Late fees can throw off your budget, delay future payments, and ultimately increase the buildup of interest, costing you more money in the long run. Luckily, there’s a new bill that will hopefully help borrowers avoid the accrual of late fees.
What is It?
Recently, a bill was signed by President Barack Obama which requires that debt collectors help student loan borrowers avoid late fees.
The bill is entitled, Consolidated Appropriations Act of 2016, and it stands at over 800 pages long. It covers a wide variety of topics, but a tiny excerpt may make all the difference regarding student loan debt collecting. A short segment of the bill states that the Secretary of the Department of Education will start sending more loan accounts to the smaller loan servicers, rather than fielding the majority of the accounts to the bigger servicers like Navient, in an effort to improve customer service. Hopefully, better customer service will mean a decrease in late fees. But how?
Why Is The Bill Necessary?
When it comes to student loans, it can be very difficult to find answers and information regarding repayment options. Student loan servicers, primarily ones run through the Department of Education, are notorious for providing little to no information to their customers regarding their repayment process. Often, by the time their customers work it out for themselves, they’ve already missed a payment and late fees have started accruing. Additionally, anyone who has had experience dealing with student loan servicers will probably tell you that it’s not easy getting straightforward answers and assistance when contacting your loan provider.
Many customers have reported their concerns about not having received enough assistance from their loan servicers to help them properly avoid late fees or ensure they have a reasonable repayment plan. Consequently, the Department of Education has received flack for allowing their student loan providers to continue practicing as debt collectors without first providing adequate information that could help prevent the extra fees.
The proof is in the numbers. The primary four Department of Education Loan Servicers, Nelnet, Navient, FedLoan Servicing, and Great Lakes, have much higher delinquency rates than all the others, and as such are coming under heavier fire due to customer complaints.
What Will the Bill Do For Student Loan Repayment?
The bill proposes a relatively simple solution: the Education Department must treat all of its debt collecting student loan providers equally. The primary four servicers must adhere to the same guidelines and standards as all other providers, and improve their customer relations in an effort to provide more accurate information and prevent unnecessary fees.
The bill also aims to start sending more student loan customers to some of the smaller lenders with higher feedback ratings, in an effort to improve customer satisfaction.
What Does This Mean?
Hopefully, with improved customer service and better communication, late fees and repayment problems will decrease, allowing people to get out from under their student debt. The bill will be put into effect in March, allowing for the Education Department to discuss and negotiate with their loan servicers on how best to implement the plan.
This is another step forward for student loan holders, and I’m hopeful it will prove helpful to everyone!
About the author
Trinya’s passion for helping others understand student loans started when she began learning all she could to fill in what she didn’t know about her own loans. She enjoys speaking at local schools about the cost of college and assisting friends with their finances. In her free time, Trinya also enjoys reading, writing, and playing music.