Student loan ‘train wreck’: As return of regular payments loom, servicers have less staff to field expected deluge of calls

Over the past several years borrowers have struggled to get the right or enough information from servicers to keep their loan payments manageable. But the organizations are expected to receive a deluge of calls when student loan payments resume that far exceeds call volume during any previous period. The Biden Administration has said the coronavirus-era freeze on student loan payments, interest and collections will end 60 days after litigation over its debt forgiveness program is resolved or 60 days after June 30, 2023, whichever comes first.

The cuts to staff and hours will likely mean “longer wait times, fewer folks on the phone to provide service,” to borrowers during this period, said Sarah Sattelmeyer, the project director for education, opportunity and mobility in the Higher Education Initiative at New America, a think tank.

No Saturday hours and fewer evening hoursAs part of the change to the contract, the Department is reducing the minimum number of customer service hours Nelnet-owned servicers, which includes Nelnet and Great Lakes, is required to provide. Previously, Nelnet was required to have its contact centers open from 8 a.m. to 11 p.m. EST on Mondays, 8 a.m. to 8 p.m. Tuesdays through Friday, and 10 am to 2 p.m. on Saturdays. Now, the company isn’t required to have its contact centers open on Saturdays. In addition, it’s required to be open for two fewer hours in the evenings on Mondays, Thursdays and Fridays. 

Because Nelnet is a publicly traded company, it was required to disclose the contract changes and the Department of Education’s decision to transfer 1 million student loan accounts to another servicer to investors and the Securities and Exchange Commission. MarketWatch couldn’t confirm whether the other major student loan servicers were subject to similar contract changes; representatives from the organizations declined to comment or didn’t respond to questions about their servicing contracts. But Scott Buchanan, the executive director of the Student Loan Servicing Alliance, a servicer trade group, described the cuts to customer service as “across the board.”

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