Student Loan Servicers Withdrawing Funds Without Notice? Here’s What to Do
Heads up, federal student loan borrowers: We’re seeing a troubling pattern.
Federal student loan payments are scheduled to restart soon but many clients are telling me they’ve received no communication from their loan servicer. No bill, no due date, no payment amount.
To make matters worse, we have heard of loan servicers withdrawing funds from a borrowers' bank accounts without notice, even though the borrowers were not due to make any payments, were not late, not in default, or had not received any notice of this action. (Yes, really.)
Mistakes are happening. It's time to pay attention.
Here’s what you can do:
If you don’t know who is servicing your loans, access your credit reports at annualcreditreport.com. Review from at least one credit bureau (I recommend starting with Experian) to see what education or student loans show up. On your credit report, look to see what the direct withdrawal indicates regarding which party initiated it. You can ask your bank for more information if needed.
Log into studentaid.gov and go to My Aid to find your loan servicer. Then log in to your loan servicer’s website regularly to check for updates. If nothing about your loans shows up online and you can’t reach anyone, document your outreach attempts (site logins, emails, calls, screenshots).
Call, email, chat, submit online at the Student Loan website - until you reach a human. Update your contact info with your loan servicer and StudentAid.gov to ensure they can reach you.
If you aren’t sure what your loan monthly payment amount might be, you can use this helpful simulator to try out different repayment plan scenarios.
Read your loan documents to understand what you signed, and what they can and cannot do with regards to your loan payments and withdrawals.
Monitor your bank account for unexpected withdrawals.
If you filed your taxes online, the IRS and government have your bank account information. You may want to update your bank account so that any payments are coming from your preferred bank account that can cover them.
If you believe funds were taken improperly, file a complaint with the Federal Student Aid Ombudsman or Consumer Financial Protection Bureau (CFPB).
Consider also reaching out to your local elected official (Congressperson and/or Senator) to inform them what happened and to obtain support. You can also consider contacting an attorney.
If you’re unsure where to start or how to navigate this, talk to a qualified financial coach or financial counselor (like an AFC®).
