When it comes to credit and student loans, borrowers should be able to feel secure knowing that their student loan servicing company and the credit reporting agencies are honest and forthcoming. However, recently, many borrowers have learned that this is not the case. More astonishing is the fact that during this pandemic despite the government suspending interest and payments on student loans until the end of September, these entities are holding this against the borrowers and reflecting this information negatively on the borrower’s credit report.
In this guide, you will learn about the repayment options for your Great Lakes loans and the current and past Great Lakes lawsuit(s) against them. You will also learn about additional resources that are available to you to help you pay off your student loans.
If you have questions about the options available to you or need help making better decisions regarding your student loans, you can contact our office and speak with a student loan advisor, who is more than happy to help you.
About Great Lakes
Great Lakes Educational loan services is a non-profit student loan servicer, headquartered in Madison, Wisconsin that works with thousands of schools and lenders to help students attend college. Although Great Lakes does not offer student loans, they are a guarantor or loan servicer to many borrowers throughout the country. They provide student loan services which include repayment plans, loan forgiveness programs, and consolidation options to student loan borrowers.
Great Lakes Lawsuit
As part of the Cares Act and in response to the nationwide pandemic, the Government suspended the accrual of interest and the payments on student loans. This suspension ensured that student loan borrowers would not feel the hit on their credit reports because the information should have been reported and treated as if the borrower made the regularly scheduled payment, and not labeled as “deferred” in the comment section of their credit reports.
However, Great Lakes and 3 main credit reporting agencies, Equifax, Transunion, and Experian, failed to properly report this information on credit reports according to a proposed lawsuit. This failure to account for changes made by the Cares Act has caused credit ratings to be compromised due to a drop in credit scores, which jeopardized the access to acquire additional lines of credit for these borrowers.
Great Lakes has publicly acknowledged the inaccurate handling of the Cares Act relief for student loans. They apologized via Twitter and announced that they would retroactively correct the issue. However, they have claimed that this error did not impact the credit scores of consumers. Many borrowers that this error has affected beg to differ, as per the lawsuit. You can read more about the lawsuit at classaction.org
Additional Wrongful Actions
In addition to the currently proposed lawsuit against Great Lakes and the 3 main credit reporting agencies, Great Lakes has been accused of doing several other fraudulent actions. This includes the following:
- Delays in processing income-driven repayment plan applications
- Turning off autopay for many borrowers without consent, which caused them to miss payments and missing out on a .25% interest rate reduction.
- Not applying loan payments to the correct loan.
- Placing borrowers on the wrong payment plan.
- There have been many complaints that debt collection agencies hired by Great Lakes were harassing consumers to make payments on a loan that doesn’t exist.
- Increased principal interest and balances on student loans following an administrative forbearance.
- Even before the Cares Act, Great Lakes has been accused of reporting inaccurate information to the credit agencies.
How To Seek Help With Great Lakes Loans
Class action lawsuits can take time to resolve, which means if you are affected by the lawsuit of the way Great Lakes has handled the reporting of suspended payments under the Cares Act, it will be a while before you can submit a claim. However, until a decision is rendered you should make plans on how you will manage payments on your student loans, including your Great Lakes loans once the suspension of payments expires.
You have several options available to you to help pay off your student loans and to avoid defaulting on your loans once the terms of the Cares Act ends.
Repayment Options
Federal Student Loan Consolidation – Your loans can be consolidated into one payment. This is beneficial if you are making separate loan payments to different holders or servicers.
Income-Based Repayment Plan– This is a repayment plan that is based on your debt to income ratio. Payments are 10% or 15% of discretionary income and your remaining loan balance after 20 or 25 years is forgiven.
Income-contingent repayment plan– After making payments for 25 years, the remaining balance is forgiven. Your monthly payments will either be 20% of your discretionary income, a payment amount based on a fixed payment of 12 years whichever is less.
Revised Pay As You Earn Repayment Plan– Payments are 10% of your monthly discretionary income. Any balance remaining after 20 or 25 years is forgiven.
Total and Permanent Disability Discharge– If you meet the Department of Education’s definition of total and permanently disabled, you can apply for a Total and Permanent Disability Discharge of your student loans. This includes loans under the direct loan program, FFEL loan program, and the Federal Perkins Loan Program. You must submit documentation with your application, from either the Department of Veterans Affairs, Social Security Administration, or your physician.
Public Service Loan Forgiveness– If you work for a qualifying employer in the government or non-profit sector, while making 120 monthly payments under a qualifying repayment plan, you may qualify for loan forgiveness for the remaining balance under this option. If you are denied loan forgiveness under this option, there is a limited-fund opportunity that is available Temporary Expanded Public Service Loan Forgiveness.
If you have questions about the repayment options that are available to you, contact our office and speak with one of our student loan specialists.
Conclusion
The decisions that you make when handling your student loans is important because of the effect that it has on your credit rating and the ability to obtain future lines of credit. Reviewing your credit report and managing your student loans is one of the best ways to protect your credit rating.
If you feel that you need guidance with making the best financial decisions regarding your student loans, don’t hesitate to contact our office to speak with one of our expert student loan advisors.
