If borrowers want to be savvy, they will have to do a lot of independent research. There are a number of reliable sources, like the Department of Education, which has made a lot of improvements.
Q: One particular pain point for borrowers is those who need any delay in making payments because of financial difficulty, which means figuring out the difference between deferrals and forbearance, and navigating income-based repayment options.
A: The reason it is so convoluted is because before 2009 you have fewer options for changing a loan you could not afford. Forbearance keeps the loan current and keeps the person's track record clean. Now, however, it's not nearly as effective a tool as it used to be and should be avoided by more folks.
Income-based repayment options have been available since 2009. Initially there were no efforts to inform people about them, but in the last couple of years, there have been specific directives at the Department of Education to get information to consumers, like to those who were already behind on their payments.
But because the system is so huge and unwieldy, it has to be automated, which can make it useless to a consumer. You get these form letters that are inscrutable when you need to be informed about anything.
Q: If a borrower does not get the right information, what impact could it have on them?
A: Many people are not even aware of the ways they are paying more than they should, according to the terms of their loans, based on the practices of the servicers and the way they process payments.
There are a number of direct costs -- actual money. It's money out the door that they can't be using for other things.
It's also a source of incredible stress to many people. It affects credit and people's ability to participate in the economy - like being able to get mortgages and auto loans.
Q: How can students best help themselves through the process?