FedLoan Lawsuit: How To Change Your Loan Servicer?

Loan servicers deal with the billing and other administrative issues for student loans. They act on behalf of the government or a private company.

The FedLoan Lawsuit of 2017

In 2017, the Massachusetts Attorney General started an investigation against FedLoan Servicing. The base of this lawsuit, allegedly, was the poor customer service FedLoan Servicing provided to customers.

The Incorrect Processing of Payments

Allegedly, FedLoan Servicing employees incorrectly processed some payments. Unfortunately, it means many borrowers made non-qualifying payments for forgiveness.

Wrong Recommendations

The lawsuit involves cases where the loan servicer recommended borrowers in financial challenges a temporary solution-forbearance. During the forbearance period, interest continues to accrue, and the borrower faces higher debt when the forbearance is ended.

TEACH grant is financial aid provided to people serving as teachers. The awardees of this grant do not need to repay the grant as long as they remain eligible for the grant.

TEACH Grant Failure

As a result of the lawsuit, FedLoan Servicing and the Attorney General settled. Based on the settlement, every borrower could request a review of their accounts to ensure there are no errors.

What Happened as a Result of the 2017 Lawsuit?

In 2019, the New York Attorney General started an investigation against FedLoan Servicing. The claims of this lawsuit were similar to those in 2017.

The FedLoan Lawsuit of 2019

If you feel worried about your loan servicer’s operations after this guide, you have to take several steps. 1. Change Your Loan Servicer 2. Get Familiar with the Processes 3. Keep Copies of Your Records

How to Avoid Loan Servicer Errors?

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