HESC/EdFinancial (also known as just EdFinancial, and formerly known as ESA/EdFinancial) is a student loan servicer based out of Knoxville, Tennessee. In 2012, the federal government awarded them a contract to service federal student loans.
They also service student loans for a variety of different lenders. Founded in 1987, the company has provided financial services mainly in the southeastern region of the United States. Now, as a federal loan servicer, they might service loans for residents of anywhere in the country. They are one of the smaller federal loan servicers, compared to the giants like Navient, FedLoan (PHEAA), or Nelnet.
EdFinancial has its fair share of consumer complaints that have been posted publicly on the Consumer Financial Protection Bureau website, the Better Business Bureau website, and other places around the web. However, while the responses to complaints are not visible on some sites, EdFinancial does seem more responsive to these public complaints than other servicers.
All responses to complaints on the CFPB website were deemed timely. On the BBB website, EdFinancial responded to every single customer complaint in great detail. For BBB complaints, EdFinancial provides play-by-play details of the interactions with the consumers and explain why they did or didn’t do certain things.
Whether these responses are satisfactory to the consumer is a different story. Many BBB complaints were still marked by consumers with “unsatisfied with the response.” While a detailed response is better than nothing, the responses may not have addressed the problem at hand.
It is difficult to tell in the CFPB complaint database whether the responses by EdFinancial were deemed acceptable by the consumer since detailed responses are not available.
That being said, we are going to highlight some complaints that we saw that were significant or troubling. They might be one-off scenarios or they might speak to underlying issues within EdFinancial.
Loans Transferred From EdFinancial To Another Servicer Are Being Reported Incorrectly
One of the unpredictable parts about loan repayment is that your loan servicer can switch anytime. You will be notified of the change, but you have no control over whether it happens or not. That’s because your debt is owned by someone else — and they can pick which servicer they send you to – and only owed by you.
A few problems resulted from switches from EdFinancial to other servicers. In one case, after a borrower’s loans had transferred away from EdFinancial, EdFinancial reported to the credit bureaus that the loans were delinquent. After a simple transfer, this borrower’s credit tanked because of seemingly false reports from EdFinancial. The new servicer was reporting the loans as being current.
Another customer got transferred to a new servicer during their in-school deferment period. Apparently EdFinancial reported the loans as delinquent because they did not accept proof of the need for deferment. The new servicer, however, accepted the deferment and, according to the consumer, was reporting the loans as current.
In both examples, it’s hard to decipher why EdFinancial reported any of the loans as delinquent. It may be a case of inaccurate reporting on EdFinancial’s end, regardless of the transfer to the new servicer. However, it could speak to an underlying issue of uneven reporting practices or forbearance and deferment practices across multiple servicers. Since these are federal loans, these practices should be consistent.
Slow Customer Service Resulting In Delayed Processing Of Income-Based Repayment Application
An income-based repayment (IBR) plan might be a necessary tool for someone to stay in good standing with their loan. Especially if they experience a sudden change in their financial situation, their good loan status may be in jeopardy if they do not immediately file an application. However, a slow IBR application process may throw a wrench in the relief plan, even if the borrower was quick to act.
A borrower filed an IBR application quickly after she lost her job and EdFinancial accepted her application. The next year, however, EdFinancial rejected her recertification. The borrower believed this was an incorrect rejection, especially because she was on food stamps, Medicaid, and happened to be 9 months pregnant.
But when the borrower asked for more information to properly complete the application, EdFinancial’s replies were slow or incomplete. This delay may have prolonged a forbearance period she did not intend to have, or simply made it much more difficult to pay her loan.
Given she was 9 months pregnant, it seemed like urgency was key and EdFinancial’s customer service did not serve in the way she required.
Excessive Phone Calls
While incomplete information or slow reactions from customer service can be frustrating, sometimes too much contact from a servicer is equally frustrating.
One complaint is from an ex-spouse of an EdFinancial borrower. The borrower was likely delinquent or in default on their loans and EdFinancial was attempting to collect from them. The complaint says EdFinancial was calling the ex-spouse many times in an attempt to reach the borrower.
After repeated phone calls, the ex-spouse asked to be taken off the call list, as they had no involvement in this debt. At the time of the writing, EdFinancial had refused and kept calling.
Misapplication Of Loan Payments
Many borrowers complain about their loan payments not going towards the principal. Student loan rules — at least for federal loans — require that all outstanding interest and fees be paid first, then the principal is paid.
However, one complaint about EdFinancial goes beyond the question of whether interest or principal is being paid and instead addresses misapplication of payments meant to target specific loans. Consumers are allowed to specify where any extra payments go.
First, the borrower wanted to pay off their higher-interest loan. After calling to ask about the necessary steps to achieve this, customer service directed the borrower to do this via EdFinancial’s online payment service, Kwikpay.
The customer service rep also had to make several manual adjustments in order to target the specific loan. The borrower said they were on the phone with the rep for over 20 minutes as they made these adjustments. The borrower then used Kwikpay to apply the payment. However, when the borrower later checked after the payment went through, the payment had been applied to two loans instead of just the one.
The borrower called back and was told their request to pay off one automatically on Kwikpay was impossible. This directly conflicted with the 20-minute call with the other rep. Only after a couple did the borrower eventually got the proper allocation completed.
EdFinancial publicly followed up with this complaint. They said the first customer service rep had been misinformed and the proper allocation had been completed.
They did apologize, but the borrower still felt that it was an inadequate reply given they had to make several phone calls to correct the mistake of the EdFinancial representative. It’s understandable, given the initial “misinformed” rep spent 20 minutes on the phone with the borrower giving them false information.
Getting Help Outside Of EdFinancial
EdFinancial is pretty responsive with publicly posted issues. This might speak to a higher quality level of customer service. However, some complaints do touch upon issues consistent with other loan servicer problems. They might be ongoing issues within EdFinancial, as well as problems that might be endemic to the industry as a whole.
While you will always need to interact with your loan servicer to get problems fixed or questions answered, they are not the only resource. Doing your own research regarding your loan problem is always a good idea. It’s important to vet your sources, but having perspective and knowing you may not be the only person with that problem can’t hurt, whether that’s with an IBR application, making your payments, or anything else.
If you are having trouble with repaying your federal loans, we suggest talking to Ameritech Financial by calling (866) 863-3870. Ameritech Financial is a company independent from any loan servicer that works with borrowers to assess loan situations and help get qualified people into the right repayment programs. They can even get you on track to forgiveness if you’re eligible.
They prepare applications for you and advise you about everything you need to successfully enter in and stay current in federal repayment programs.
No matter what, your own knowledge about your loan situation will help you. It may clarify your problem, make you realize you need assistance, or help you understand what your servicer is doing wrong.
Have you ever had any of these problems with your student loan servicer?