Do you have a loan being serviced by Great Lakes? Great Lakes Higher Education Corporation is one of the largest loan servicers in the country. (The other big ones are FedLoan, Navient, and Nelnet.) Great Lakes is responsible for handling payments for millions of borrowers with student loans issued by the Department of Education as well as borrowers with private student loans.
Though Great Lakes is a nonprofit and a major player in the student loan industry, they aren’t immune to consumer complaints about their practices. Despite a Better Business Bureau rating of A+, they have a high number of complaints on the BBB website. Consumer complaints are also numerous on Consumer Affairs as well as the Consumer Financial Protection Bureau website. Great Lakes’ motto is “Doing what’s right.” But are they?
We’ve taken a look at some of the publicly posted complaints and noticed trends in the questionable practices of Great Lakes. Here are complaints about Great Lakes Student Loan Servicing that stood out to us.
If you're not quite sure where to start or what to do, consider using a service like Chipper. Chipper will walk you through exactly what you should do with your loans - from lowering your payments to finding student loan forgiveness options. Check out Chipper here >>
If you know you want to leave Great Lakes and are considering refinancing, check out Credible here and find the lowest rate today. If you refinance with Credible you can get a bonus of up to a $1,000 gift card. Check out the other best places to refinance your loans here.
Note: If you had Great Lakes, but now have Ascendium, here's what you need to know: Ascendium Student Loans.
Failing To Apply Loan Payments Correctly
Paying ahead or extra on your student loan can make you feel good. You might be knocking off a chunk of your principal and avoiding some interest from piling up. Paying off high interest loans first is a known debt payment technique called the avalanche method and may help you manage your debt better.
However, things don’t always go as planned. Great Lakes has a rule, like all federal loan servicers, that “after all interest is satisfied” any extra payments borrowers make will be applied to the loan with the highest interest rate.
However, many borrowers claim that when they paid more than their required payment, Great Lakes did not follow through on this claim. The money was applied to the wrong loan. When they called, emailed, or wrote letters to inform Great Lakes that they wanted the extra payments to be applied to the high interest loans, the payments were still misapplied.
One borrower on the CFPB website wanted to pay off a specific loan in full and specified as such, but the money was still applied to the wrong loan.
These good faith efforts of borrowers to get ahead on their loans and quickly pay down the loans with the highest interest seem to be rewarded with misdirection and confusion.
You can do your best to prevent the problem by logging into your account and seeing if the right payment application method is selected. However, that isn’t a guarantee things will be done right.
In fact, you may even need to get a student loan debt lawyer involved to help you sort out the mess.
Turning Off Auto Pay Without The Borrower's Consent
Auto-pay seems like a good idea for the busy borrower, right? Set and forget. It’s a great idea for servicers too because auto-pay is the closest they can get to guaranteed payments. Most servicers reward borrowers with reduced interest as long as they are in auto-pay — Great Lakes offers a 0.25% interest rate reduction. That’s even more incentive to set up auto pay for someone who tends to forget to pay their bills.
However, several borrowers have posted complaints about Great Lakes inexplicably turning off the auto-pay, causing them to miss a payment and lose their interest discount. The reason was not clear for this sudden switch.
Again, this seems like a good faith effort to pay back loans is being punished.
Placing The Borrower In The Wrong Repayment Plan
For the many people who can’t afford their payments, enrolling in the right payment plan can mean the world. Especially if they are in danger of defaulting. But when their servicer makes a mistake when placing them in a plan, it can be disastrous.
Unfortunately, this has happened more than once at Great Lakes. Borrowers relate how they received notices that they were in a different payment plan or payment status than they had asked to be in.
One borrower claims she was merely browsing her payment plan options online, decided to stick with the one she currently had, and left it at that. She was surprised when she later found out Great Lakes was processing a payment plan switch that she never asked for.
Several borrowers claim to be put into forbearance for months on end because their income-based repayment plan applications took so long to be processed, which is the subject of our next point.
Failing To Process Income Driven Repayment Plans
An IDR plan can be a financial life-saver. It can even be a requirement, like if you’re hoping to receive Public Service Loan Forgiveness. But an IDR offers no relief if you don’t even know if your application has been accepted. In fact, a failure to process IDR applications may set qualified borrowers back months in their path to forgiveness — through no fault of their own. Long delays are a frequent complaint of Great Lakes borrowers. (This issue is similar to claims that have been made against FedLoan.)
Many complaints are from consumers who applied for an IDR plan only to wait many months for a result, if any came at all. When the IDR applicants called Great Lakes to check on the situations, answers from representatives were evasive. Some borrowers re-applied, hoping for a result, but still nothing happened.
One borrower was facing the capitalization of the interest on his loan. Capitalization is when the interest on the loan gets added to the principal. The borrower was told if he applied for an IDR by a certain deadline, the capitalization wouldn’t happen.
He applied by the deadline, but the interest was still capitalized. When he contacted Great Lakes to inquire, they told him his IDR application had to be processed by the deadline for his capitalization to be avoided, which it had not been. This is unfair to the borrower not just because the processing time could be lengthy, but because the borrower has no control over it.
When the complaints were filed most of these issues were unresolved, so it’s hard to tell if or when these IDR applications were ever processed.
Reporting False Information To The Credit Bureaus
A credit report can change your whole life. It affects your ability to buy a car or a home. It may affect your ability to rent an apartment or even get a job. A bad mark on your report is upsetting; however, a bad mark on your report that is false might be even more so.
Several borrowers claim that Great Lakes falsely reported delinquency or default to the credit agencies, messing up their credit scores — sometimes severely. These borrowers, whose loans are in good standing, often feel punished for their good behavior.
Sometimes a false report doesn’t just mean bad information about your loan. Sometimes it means information is on your credit report about a loan you never took out. Make sure you are checking your credit report at least once a year. Learn about 3 ways that you can get a free credit score and report.
Attempting To Collect Payment From People Who Never Took Out Loans
Perhaps the most unsettling complaints are about attempts by Great Lakes — or their contracted collection agencies — to collect on loans that people never took out. While this is not the most common situation, it can be a really distressing one to find yourself in.
One person noticed their credit report featured a loan they did not take out. Great Lakes was reporting the loan, but the servicer failed to show adequate information identifying the true borrower of the loan, the complaint said.
Another person was contacted at their workplace by a collection agency working on behalf of Great Lakes. The person in question seemed to have the same first and last name as a real borrower, but their middle names differed; it was not the same person.
The student loan collection agency contacted several times and, despite being informed it was not the right person, began to garnish wages. Luckily, the matter was eventually settled and the person was taken out of collections.
Why Did My Loans Move From Great Lakes To Ascendium?
Last year, Ascendium spun-off from Great Lakes and handles FFEL Loan program loans that were previously handled by Great Lakes.
It's kind of confusing, so we put together a full guide on Ascendium Student Loans here.
How to Contact Great Lakes Customer Service
You can reach out to Great Lakes Customer service in the following ways:
Phone number: (800) 236-4300
Hours of operation: 7-9. Mon-Fri (CST)
General mailing address:
Great Lakes
PO Box 7860
Madison, WI 53707-7860
Email/online contact form: Contact form
Refinance Your Great Lakes Student Loans
If you don't want to be at Great Lakes any longer, you don't have a lot of options. However, you can refinance your student loans if it makes sense for you.
When you refinance your student loans, you take out a new private student loan to replace your Great Lakes student loans. These loans don't have any of the Federal repayment plan or forgiveness options, but they may have a lower interest rate.
If you want to refinance, check out Credible. They are like the Kayak of student loans. You can easily compare your refinance options in minutes. It takes about 2 minutes to see if it's worth it, and you can get up to a $1,000 gift card bonus when you do. Check out Credible here.
Our Advice? Consider Professional Help
These stories can be a bit unnerving, but they also may ring true for people who have Great Lakes as a loan servicer. If you find Great Lakes unhelpful, you may want to do your research and find other organizations who can help you figure out your loan situation.
If you're not quite sure where to start or what to do, consider hiring a CFA to help you with your student loans. We recommend The Student Loan Planner to help you put together a solid financial plan for your student loan debt. Check out The Student Loan Planner here.
Have you used taken out student loans with Great Lakes before?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.
Editor: Clint Proctor