April 24, 2018

Great Lakes Student Loans: What You Need to Know

Is Great Lakes your federal loan servicer? Read on for what you need to know. Learn how to avoid common problems.

What Is Great Lakes?

Great Lakes, or Great Lakes Educational Loan Services, Inc., is a federal student loan servicer. They have been loan servicers for over 50 years.

Note: Great Lakes was recently acquired by Nelnet. But there will be no changes to payments and customer services.

Great Lakes helps you manage your student loans. Their services are free. Some of the things they help with include:

  • Keeping track of your balances and assisting with billing
  • Loan consolidation
  • Switching repayment plans if you can't afford payments
  • Applying for forgiveness programs

Great Lakes currently holds over $80 billion worth of guaranteed loans. They service over 8 million borrowers of both private and federal loans.

With so many borrowers, there are bound to be support issues. We've highlighted some of the common problems in this article. You can avoid them if you know the right steps to take.

Remember: If you need to postpone or reduce payments, you should. Using a temporary option is better than ending up past due or in default. But taking a lower payment because you do not want to make the standard payment is not wise. This will result in paying more interest over the life of your loan, meaning more money out of your pocket.

Repayment Help from Great Lakes

All student loan borrowers begin repayment with the Standard Repayment Plan. The Standard Repayment Plan evenly divides payments over 10 years. This plan may result in higher payments, but it has the least amount of interest.

If you can't make the monthly payments, Great Lakes offers several repayment and postponement options.

  • Graduated Repayment Plan: This plan is still a 10-year plan, but the payments start out low and get bigger. Your payments increase by 20% every two years. The last two years of payments will not be more than three times your original payment.

    This is a great option if you know that your income will increase over the next decade. If you do not think you will be able to afford the increase every two years, you may want to reconsider.

    Keep in mind that you can always return to the standard repayment plan. Or you may want to enter one of the income-driven repayment plans.

  • Income-Driven Repayment Plans: These plans depend on your current financial situation. The federal government offers four income-driven repayment plans. The plans are Pay As You Earn (PAYE), Revised PAYE, Income-Based, and Income-Contingent.

    You should discuss this with your servicer. You can also logon to the Student Loans website to apply. There are income restrictions. But once you have your tax documents, a rep can assist you.

  • Deferments and Forbearances: If you need to postpone payments for any reason, a forbearance or deferment helps. A forbearance may be used if you're unemployed, underemployed, or have excessive medical expenses. Each is valid for up to 12 months, with a cumulative maximum of 3 years. Your servicer may also grant you one at their discretion if your account is past due.

    A deferment is also good for up to three years. Most common uses of deferments are: unemployment, in-school, and military service. You'll need to qualify for a deferment. Contact your servicer if you need your loans to be postponed. Read our article on deferments and forbearances to learn more.

    What's the difference? Both pause your payments temporarily. The main difference is that while in forbearance, the interest on your loans will keep accruing, while interest doesn't accrue for subsidized loans while in deferment. Forbearance is an option for those who don't qualify for deferment.

Common Problems

  • Errors with Income-Driven Plans: Income-driven repayment plans take a considerable amount of time to process. It requires tax documents, forms, and sometimes other information. If you're a married borrower, this may be even more difficult.

    Great Lakes has had problems with processing forms, even losing them. This can be very worrisome for borrowers, as many need these plans to make their loans manageable.

    What You Can Do: Keep in contact with your servicer. If you have submitted forms, make sure that they make it to your servicer. A quick call to check on the status should do the trick. If your servicer has not received the forms, send them again. But make sure you request a forbearance if your due date is coming up, so your account doesn't go past due.

  • Wrong Repayment Plans: Some borrowers have had issues with being placed in the wrong repayment plan. Some have even had forbearances added to their account for extended periods.

    There is nothing wrong with a repayment plan, as long as you have chosen it. The same with postponements. Your servicer may offer a forbearance as a courtesy to keep your loans current. This may be necessary while forms come through the mail. But if you have called to end the forbearance, your servicer should apply the stop immediately.

    What You Can Do: The best thing to do is to always check your accounts. Perhaps you noticed last week you were in the standard repayment and this week it says graduated. If you did not request the change, contact Great Lakes right away. Errors occur. Do not ignore your loans.

  • Turning Off Auto-Pay Without the Borrower's Knowledge: Some borrowers have complained that Great Lakes turned off their auto-pay without notice. Auto-pay is great. It keeps your loans current and up-to-date. And many loan companies even offer you an interest rate reduction for using it.

    What You Can Do : If you have noticed your auto-pay was interrupted, contact your servicer. There may be several reasons. Have you changed accounts and forgot to update to the new account? It could be something occurred and there is a system-wide outage. It isn't common, but things happen. Just contact Great Lakes and make that payment on your loans as soon as you notice the mistake. You may want to remove your information and then re-enter it.

  • Failure to Apply Payments: Many students wish to pay off student loans early. You can specify larger payments on certain loans. But sometimes, it's not set up correctly. Some borrowers were told that their payments were not being applied to the proper loans.

    Remember: When you make a payment on your student loans, it is applied to interest first. A smart thing to do is to pay down loans with the highest interest first. Your servicer allows you to do this.

    What You Can Do: You should always keep in contact with your servicer. If you notice that a payment was applied wrong, call Great Lakes. They may not be able to fix the past payment. But you can have them look into what is going on with future payments. You can also logon to your Great Lakes account and make sure the payments are applied.

  • Incorrect Information to the Credit Agencies: Credit is one of the most important things you need for everything. You may have graduated with no or poor credit. If you take care of your student loans, they will be great for your credit.

    Great Lakes has reported some borrowers' accounts as delinquent or in default. The causes many issues. Borrowers think they're current and this will cause a blemish on their report. This may affect your ability to get a mortgage, a car loan, or a personal loan in the future.

    What You Can Do : You should always track your credit. If you notice an error, contact your servicer immediately. They should be able to remove the negative remarks. If they are unable to, a note can be added to your credit report. Make sure to get your free credit report once a year.

  • Collecting Payments from People Who Have Not Had Loans with Great Lakes: A final problem that people have had with Great Lakes is collections on non-borrowers. Many servicers may contact the wrong person regarding a loan. Numbers change. People have common enough names and addresses. Confusion happens. There are some reports of Great Lakes attempting to collect debts from people who don't have loans.

    This can be a scary thing. You look at your credit report one day and it shows Great Lakes with a loan amount for a loan you don't have. Or you get a call from Great Lakes about your delinquent or defaulted loans.

    What You Can Do: If you have received a call by mistake, contact Great Lakes to report it. You should also contact the credit bureau that shows the error. Both parties are responsible for fixing this error under the Fair Credit Reporting Act. You need to communicate what the issue is right away to the credit bureau. This way, they can begin a report.

When Should You Contact Great Lakes

You should contact Great Lakes if you have any issues. They are there to help you with payments. Having any problems with the website? Call Great Lakes; a customer service representative can walk you through the options.

There are times when it is necessary to contact your servicer. You should call when:

  • You see bill issues
  • Your contact information changes
  • You can't afford your payments
  • You need to change your payment due dates
  • You received a bill while still in school
  • You have not received a bill

Great Lakes can be contacted at 1-800-236-4300.

If you have a problem that Great Lakes can't solve, you can escalate it to the Department of Education. If you still cannot resolve the issue, you can contact the FSA Ombudsman Group. They are a confidential resource to resolve student aid disputes. You should use them as a last resort.

What if You Would Like a Different Loan Servicer

There are a couple of options if you would like a different loan servicer. This depends on the type of loan Great Lakes is servicing and your credit profile.

  • Consolidation: If you have only federal loans, consolidation is an option. You can remain with Great Lakes or choose a different servicer. Consolidation is useful as it creates just one monthly payment, so you don't have to keep track of multiple payments throughout the month.

    If you consolidate, the DOE recommends entering an income-driven repayment plan. Not only will you have one monthly payment, but chances are the payment will be lower than before. Consolidation is also useful if you're considering refinancing.

  • Refinance: Refinancing is useful for both federal and private loans. You may have many payments to many servicers. That also means different interest rates. The best thing you can do is to refinance, provided your credit is in better shape than when you first got your loans.

    Refinancing can help you save hundreds, even thousands. Not only can you get a lower interest rate, you can also get a more affordable term to get out of debt faster. It makes payments more manageable with fewer bills to keep track of.

Bottom Line

Like other servicers, Great Lakes has flaws. If you are having any issues, contact them immediately. The best thing is to remain in contact with your servicer. Keep informed by monitoring your loans from the date of first disbursement. Be aware of any fees and questionable charges.

Keep yourself educated. Read through our other articles about student loans. We can help you gain confidence when speaking with your loan servicer.

Write to Nicole S at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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