{"id":571589,"date":"2023-04-24T13:00:00","date_gmt":"2023-04-24T10:00:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/student-loan-servicers-brace-for-trouble-with-restart-of-payments\/"},"modified":"2023-04-24T13:00:00","modified_gmt":"2023-04-24T10:00:00","slug":"student-loan-servicers-brace-for-trouble-with-restart-of-payments","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/student-loan-servicers-brace-for-trouble-with-restart-of-payments\/","title":{"rendered":"#Student loan servicers brace for trouble with restart of payments"},"content":{"rendered":"<p><img decoding=\"async\" src=\"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/02\/scotus_loan_forgiveness_022823gn_w-1.jpg?w=900\" \/><\/p>\n<div>\n<p>Student loan servicers are in a tough bind, dealing with reduced staff as they prepare for the unprecedented situation of 44 million borrowers returning to payments later this summer.<\/p>\n<p>Student loan payments are expected to restart at the end of August at the latest, including for many borrowers who graduated during the pandemic and have never made such payments before.\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr1_ab\"><\/aside>\n<p>\u201cI think the real challenge is the resource constraint, right? That\u2019s really on the customer service side,\u201d said Scott Buchanan, executive director for Student Loan Servicing Alliance (SLSA). \u201cSystemically, we can handle this, but that customer service component is going to be constrained, and that\u2019s because the [Education] Department has continued to make cuts to the customer service funding for student loan servicers.\u201d<\/p>\n<p>SLSA is a nonprofit trade association that works on student loan servicing issues. It says its members, which include federal student loan servicers Aidvantage and Edfinanical Services, are \u201cresponsible for servicing over 95% of all federal student loans and the vast majority of private loans.\u201d<\/p>\n<p>The lack of money for customer service in the industry can potentially be traced back to a denial of increased funding for the Federal Student Aid (FSA) office by Congress last year.\u00a0<\/p>\n<p>\u201cIt\u2019s important to think about this holistically,\u201d said Sarah Sattelmeyer, project director for education, opportunity, and mobility in the Higher Education initiative at New America. \u201cFSA\u2019s budget constraints are certainly affecting servicers. And I think that\u2019s an incredibly huge problem because it affects the ability to effectively have a student loan support system [\u2026] all of the things that FSA has on its plate \u2014 it\u2019s never had more things on its plate. There\u2019s a lot of new reforms coming down the pipe, and a lack of funding is really impacting its ability to do all of that work.\u201d<\/p>\n<p>A spokesperson for the Department of Education said the funding Congress gave to FSA was inadequate for the tasks ahead.\u00a0<\/p>\n<p>\u201cAs the Department has repeatedly made clear, restarting repayment requires significant resources to avoid unnecessary harm to borrowers, such as cuts to servicing,\u201d the spokesperson said.\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr2_ab\"><\/aside>\n<p>While Buchanan recognizes the FSA did not get the funding it requested, he believes the Education Department still has the ability to fully fund the needs of student loan servicers.\u00a0<\/p>\n<p>\u201cI think the real challenge is that the department has sufficient money to provide for resumption and probably could always use more to make it a better experience,\u201d he said, but added that \u201cthey spent money on other programs,\u201d taking money away from customer service.<\/p>\n<p>In preparation for student loan payments turning back on, the Education Department has announced multiple initiatives they say will make the transition easier for borrowers, including reforming the income-driven repayment (IDR) system so that some borrowers wind up owing as low as $0 a month.<\/p>\n<aside class=\"ad-unit ad-unit--mr3_ab\"><\/aside>\n<p>The department is still hoping the Supreme Court won\u2019t kill President Biden\u2019s student debt forgiveness program, though that will require it and the student loan servicers to take on the Herculean task of sweeping debt relief and loan repayment resumption at the same time.\u00a0<\/p>\n<p>In the best of times before the pandemic, student loan servicers faced many complaints about customer service, with borrowers confused about the process and what programs they should be entering.\u00a0<\/p>\n<p>Spencer Orenstein, an officer on student borrower success for the Pew Charitable Trusts, says the organization tracked 400,000 borrowers over a five-year period and found eight in 10 had interactions with their student loan servicer.\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr4_ab\"><\/aside>\n<p>\u201cEven prior to this, we were in a system where services played a very important role,\u201d Orenstein said.\u00a0<\/p>\n<p>Between the potential changes to student loan repayment programs and restarting payments for millions of borrowers, a lack of staff for customer service could start a ripple effect of negative consequences throughout the whole system.\u00a0<\/p>\n<p>\u201cThe department has meaningfully reduced the amount of resources we have and people we can put on the phones. That\u2019s going to be a challenge where we will probably have longer hold time, and processing time for requests and <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lications could take a lot longer than usual,\u201d Buchanan said.\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr5_ab\"><\/aside>\n<p>\u201cWe clearly communicated to the department the consequences, them knowing we need customer service and them making these kinds of cuts. Those discussions absolutely happened,\u201d he said.\u00a0<\/p>\n<p>Forty-four million borrowers have been cozy for three years without having to make any payments, and they are still in limbo as there is no exact date of when payments will resume. The Biden administration said a 60-day countdown to the payment resumption would start either after the Supreme Court rules on Biden\u2019s student debt relief plan or on June 30, whichever comes first.\u00a0<\/p>\n<p>If all borrowers wait until the 60-day countdown begins to talk to their loan servicer, it is expected to put a lot of strain on the companies.<\/p>\n<aside class=\"ad-unit ad-unit--mr6_ab\"><\/aside>\n<p>The best way to avoid this backlog is to start encouraging borrowers now to reach out to their loan servicers to figure out their financial situation and options for repayment.\u00a0<\/p>\n<p>Buchanan says the Department of Education needs to start encouraging borrowers now to be proactive about their student loans, but thinks they are waiting until the Supreme Court\u2019s decision is announced.\u00a0<\/p>\n<p>\u201cWe strongly advise against that because a 60-day window is not sufficient time to educate many people who it\u2019s not just repayment for them, it\u2019s beginning payment. They\u2019ve never done it before. And there needs to be a lot of education work and that should be started over many months, not just 30 days, and then here\u2019s your bill,\u201d Buchanan said.\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr7_ab\"><\/aside>\n<p>The Department of Education emphasized it is going to do \u201ceverything in its power\u201d to make the transition for borrowers into repayment as smooth as possible.\u00a0<\/p>\n<p>\u201cWe continue to urge Congress to fully fund President Biden\u2019s FY24 budget request, which would provide critical resources to FSA. At the same time, we will continue to work closely with servicers to prioritize providing services to borrowers as quickly and effectively as possible,\u201d the spokesperson said.\u00a0<\/p>\n<\/div>\n<p>Copyright 2023 Nexstar <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Media<\/a> Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.<\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. 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Student loan payments are expected to restart at the end of August at the latest, including for many borrowers who graduated during the pandemic and have&#8230;<\/p>\n","protected":false},"author":1,"featured_media":571590,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/02\/scotus_loan_forgiveness_022823gn_w-1.jpg?w=1280","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[88156,134344,134343,81842,70643,134447,124783,991,134351,71525,115,142333,142681,142682,80241,4965],"class_list":["post-571589","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-fsa","tag-administration","tag-campaign","tag-customer-service","tag-department-of-education","tag-energy-and-environment","tag-international","tag-joe-biden","tag-morning-report","tag-national-security","tag-news","tag-student-loan-pause","tag-student-loan-payment-pause","tag-student-loan-servicers","tag-student-loans","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/571589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=571589"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/571589\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/571590"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=571589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=571589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=571589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}