Know Repayment Options to Work with Student Loan Servicers

One student loan servicer reportedly has relatively few borrowers enrolled in income-based repayment.

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Students should use tools provided by the U.S. Department of Education to find the best options for paying back student loans.
Students should use tools provided by the U.S. Department of Education to find the best options for paying back student loans.

Not many people like Sallie Mae. In fact, as the Consumer Financial Protection Bureau pointed out in a recent report, it ranks lowest among the four largest Direct Loan servicers in borrower, school and federal personnel satisfaction.

Unfortunately, even though borrowers tend to dislike Sallie Mae, many of them rely on the company to provide them with sound advice about their options about the forbiddingly complex student loan system. They should not. In fact, borrowers should not rely on any servicer – almost all of which receive poor ratings – for advice. 

[Discover what you need to know before consolidating student loans.] 

Loan servicers are for-profit and nonprofit entities paid by the federal Department of Education to handle the billing and other services on federal student loans. You don't get to choose your loan servicer – the Department of Education assigns you one – and you can't change your servicer because you don't like their service. 

One thing borrowers often call their servicers about is changing their repayment plan, especially if they are struggling to make their monthly payments. And, as regular readers know, income-driven repayment plans like Income-Based Repayment and Pay As You Earn can be very protective options for struggling borrowers. These plans limit payments to an affordable percentage of a borrower's income, which can be as low as zero dollars, and provide forgiveness after 20 or 25 years. 

[Find out how the government profits from student loans.] 

In fact, to combat the ongoing rise in default rates, the Obama administration has been trying hard to inform the millions of borrowers who could benefit from income-driven repayment plans about their existence and urging them to enroll in them. Unfortunately, it appears many of Sallie Mae's borrowers aren't benefiting. 

According to the Huffington Post, documents it has obtained and estimates provided by the White House indicate Sallie Mae has enrolled relatively few borrowers into the Income-Based Repayment program. 

Specifically, the article states that although Sallie Mae owns between 37 and 40 percent of the now-discontinued Federal Family Education Loan Program debt held by the private sector, its share of FFELP borrowers who are enrolled in IBR is about half that – 15 to 18 percent.

[Learn how the new student loan deal will affect borrowers.] 

So how should borrowers choose a repayment plan? The Department of Education has good overviews of your repayment options and basic calculators that will give you an idea how much you will pay monthly in each plan. For more sophisticated calculators that will help you look at things like the amount of your payments and interest accrual over the years you will be in repayment, go to

For a step-by-step guide to borrowing, repayment and forgiveness programs like Public Service Loan Forgiveness, check out our comprehensive e-book, "Take Control of Your Future." 

These days, it's not enough to complain about your loan servicer and how high your student loan payments are. Instead, make sure you understand your options and then go to your servicer to demand the services you are entitled to and need. 

Isaac Bowers is a senior program manager in the Communications and Outreach unit, responsible for Equal Justice Works's educational debt relief initiatives. An expert on educational debt relief, Bowers conducts monthly webinars for a wide range of audiences; advises employers, law schools, and professional organizations; and works with Congress and the Department of Education on federal legislation and regulations. Prior to joining Equal Justice Works, he was a fellow at Shute, Mihaly & Weinberger LLP in San Francisco. He received his J.D. from New York University School of Law.