Caught in College Loan Servicer Hell

by Christine Alexis

College graduation is three months behind me and the glow is almost gone. My student debt looms large and I want to get a handle on it. That’s why I was pretty surprised that my loan servicer, FedLoan Servicing, didn’t contact me.  And then I discovered I’m caught in college loan servicer hell.

Just a quick explainer here. I borrowed money from the U.S. Department of Education (DOE) through the Direct Loan program. The DOE uses four non-bank, private companies called servicers to collect the money.  Mine got assigned to FedLoan Servicing.

I realized that even though they didn’t get in touch, it might be a good idea to check my account online.  And I was shocked when I found  $508 in unpaid interest on the loans totaling $21,506. And worse my interest charges went up about $75 since I checked two and half weeks earlier. It’s awful.

The call center number listed on the FedLoan Servicing website directed me to an automated system that tried to solve all of my problems without directing me to an actual person. That took a half an hour. I didn’t give up and Googled how to get directly to a human being.

When I finally got through to a representative, he failed to answer my questions or explain the repayment process clearly.

I wanted to set up a custom repayment plan through the FedLoan Servicing website. None of the options fit what I wanted to do. So, I told the representative that I want to pay $100 a month and asked how the money would be applied to the loan.

He said what I pay now will go toward the interest charges. Once the interest goes down, then the majority of the money will go toward the principal balance of about $22,000.

But here’s the bad thing. He couldn’t tell me the formula for reducing the interest payments. So I don’t know when my money will get applied to the principal.  Doesn’t interest add up as long as the loan lives?

It doesn’t make any sense. I hung up  and felt more frustrated and  helpless.  I was angry enough to see what’s out there on Google and found hundreds of pages with posts and articles like, “Why I Hate FedLoan” and “Got FedLoan Servicing? Run far, far away!”  The search told me that FedLoan Servicing generates a lot of complaints from borrowers.

To try to get a handle on what all of us who share the Fed Loan Servicing problem should do, ConsumerMojo spoke with Farouk Abdullah, a program director at New York Public Interest Research Group (NYPIRG).  He told us it’s really important to do your homework, “People need to stay informed before AND after taking out loans. That’s the key to staying on top of it,” he said.

Of course, this is a giant Catch22. If the servicer doesn’t give you the straight story, you can call a million times and still remain in the dark.

NYPIRG’s Abdullah suggested contacting the Consumer Financial Protection Bureau to file a complaint when things get really confusing, or bad. Abdullah told  us NYPIRG  tries to help students and graduates who struggle to navigate their loan repayment issues.

As a proactive step, if you are still in school and thinking about taking a loan, NYPIRG also recommended checking  National College Finance Center (NCFC). They offer information that compares the rates of different servicers. I tried it out and found the site easy to use.


1. Keep a record of the date and time when you speak with a representative and get their name.  Take notes on your conversation. This may come in handy when filing a complaint later on.

2. Make copies of any letters, bills or notices sent to you by your loan servicer and copies of anything you send back to them.

3. If a customer service representative cannot help you, ask to speak to a supervisor on staff. They may be able to help you.

4.  Other students may face the same problems. Use social media to find how others deal with these faceless loan companies. 


Keep in touch with your loan servicer. And look out for news about developments in Washington that can help us.

It’s the people in Congress who can make difference for us.  We need help and they need to hear our voices. Let’s keep the conversation going.  Look out for more updates from me!

Tell me your story.  And share with a friend!

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