Communication Between Loan Borrowers and Loan Servicers
If you are a Federal Student Aid (FSA) loan borrower, communication between you and your loan servicer is of utmost importance. If you have any questions about your loan(s) during your time in school, your loan servicer or an FSA specialist at your school is a great resource. However, the most important communication between a loan borrower and the loan servicer will occur after you have completed school and enter into repayment.
Your loan servicer will absolutely be there to field your questions, but they will also attempt to contact you, especially if you are having some trouble paying back your loans. Do not ignore your loan servicer! If you are having a financial issue, they are willing to work with you to help.
Three of the most common times a loan servicer might contact you would be if you miss a payment, if you are 75-90 days late on a payment, and if you are dangerously close to defaulting on your loans (any time after 180 consecutive days of no payment). Communication from your loan servicer may go as follows for each instance:
Missing a Payment
If you are late or have missed a payment, your loan servicer will send an email or call you to notify you that they did not receive a payment. They will provide you with options, such as paying automatically online to satisfy the payment, exploring a new repayment option, or postponing a payment. Read/listen carefully to each option to find the best route for you.
75-90 Days Late on a Payment
If you are between 75 and 90 days delinquent on your loans, your servicer may contact you to inform you that without payment in the near future your credit score could be adversely affected, as well as you will be reported to the credit bureau. They will provide you with options, such as a forbearance or deferment. If you have not already taken action to fix your delinquency status, now would be the time.
Close to Default
After you have reached 180 consecutive days of delinquency, your loan servicer will probably contact you in a final effort to help you avoid falling into default. Again, they will provide you with options if you are still in a financial crisis. Ignoring this communication would be a major detriment to your financial situation.
Loan servicers are more than willing to work with borrowers to help them succeed in paying back their FSA loans. You should keep an open dialogue between yourself and your loan servicer. Even if you do not contact them directly, they will more than likely contact you.
By Ryan Laspina
Senior Specialist, Red Flags and External Reviews