My loan servicer is FedLoan Servicing and I recently had the experience that despite getting all my IBR recertification paperwork in to them in a timely manner, due to processing times on their end I ended up with a payment 5 times my normal payment being deducted from my bank account.  I notice that a couple of others on these forums have had the same experience with their servicers and Heather mentioned that there was something in the works back in 2012 to prevent this from happening.  Have there been any developments that would help me advocate for myself in this situation?  Thanks.

AARRGGHH!!!  Sorry.  Was that my outside voice?  You’d never believe it but we’ve actually made some progress on efforts to improve student loan servicing.  No where near enough, obviously.

OK so here’s my thoughts:
Communicate with your loan servicer in writing and maybe even by certified mail
If you cannot resolve issues of erroneous servicing on your own, lodge a formal complaint with the student loan ombudsman’s office (for federal loans, CFPB for private loans): https://studentaid.ed.gov/repay-loans/disputes/prepare/contact-ombudsman
Consider whether it’s worth it to authorize creditors to directly withdraw payments (you might be getting an interest benefit by doing so).  I personally prefer to automatically push my payments from my account, rather than let anybody pull payments (since they can and do screw that up).
Notify your congressional representatives of the problems you encounter.

And yes, there are new rules that should help some, but they aren’t in force until this summer.  I’ll grab those and post them.

OK, here’s the bit from the regs (effective July 1, 2013) about notification (with my emphasis):

For each subsequent year that a
borrower who currently has a partial
financial hardship remains on the
income-based repayment plan, the loan
holder must notify the borrower in
writing of

[the requirement to re-certify income]

no later than 60
days and no earlier than 90 days prior
to

[the anniversary of the previous income determination] ...

The notification must provide the borrower with—
(i) The date, no earlier than 35 days
before the end of the borrower’s annual
payment period, by which the loan
holder must receive all of the
information described in paragraph
(e)(1) of this section (annual deadline);
and
(ii) The consequences if the loan
holder does not receive the information
within 10 days following the annual
deadline specified in the notice,
including the borrower’s new monthly
payment amount as determined under
paragraph (d)(1) of this section, the
effective date for the recalculated
monthly payment amount, and the fact
that unpaid accrued interest will be
capitalized at the end of the borrower’s
current annual payment period in
accordance with paragraph (b)(5) of this
section.

...
NOTE the draconian capitalization consequence of re-certifying income late.
...

(8) If the loan holder receives the
information described in paragraphs
(e)(1)(i) through (e)(1)(iii) of this section
within 10 days of the specified annual
deadline—
(i) The loan holder must promptly
determine the borrower’s new monthly
payment amount.
(ii) If the loan holder does not
determine the new monthly payment
amount by the end of the borrower’s
current annual payment period, the loan
holder must prevent the borrower’s
monthly payment amount from being
recalculated in accordance with
paragraph (d)(1) of this section and
maintain the borrower’s current
scheduled monthly payment amount
until the loan holder determines the
new monthly payment amount.

Hi, Heather. First off, thank you very much for providing this forum and your valuable information!

Ok… I have some negative reporting on my credit report that stems from an incident in 2012. I paid my loans through IBR. My AGI at that time qualified me for $0/month payments. So, as long as my IBR was applied correctly, I had nothing to pay each month and therefore couldn’t be past due for missing a “payment.”

Similiar to this discussion on IBR processing times, my student loan servicer denied my IBR re-certification as being submitted “too early.” I submitted it on April 20, 2012. My annual IBR payment period was schedule to end on July 3, 2012. According to my servicer, I could only submit it within 60 days from the end of the payment period; so, anytime after May 3, 2012 and I would have been fine, but April 20, 2012 was “too early.” Since they denied the IBR re-certification as being too early, they ignored my tax documents all together and re-calculated my payments using the standard repayment schedule. I assumed my IBR was applied correctly and since I would have had $0/month payments, I didn’t stay on top of it as I should have. This led my account to become past due.

My loan servicer said there are “unpublished” Department of Education loan processing guidelines stating that IBR application/re-certification submitted more than 60-days before the end of the current annual IBR payment period can be denied and not considered. I don’t buy it and requested them to provide the source.

Regardless, assuming without conceding that it was “too early,” couldn’t they have just held onto my IBR application/re-certification and processed it when they felt it was appropriate?? My signed Federal tax return was not going to change from when I submitted it on April 20, 2012 until the end of my annual IBR payment period on July 3, 2012! I don’t get it!

I also contacted the Ombudsman’s Office but apparently I have to hash it out even more with my servicer before they will help me.

That citation you provided is to 34 C.F.R. § 682.215, correct? When I provided that citation to the supervisor I spoke with at my loan servicer, she had absolutely no idea what I was talking about! Are there any other regs/laws/guidance which you know of that apply to the IBR program? And are you aware of any restrictions that limit a borrower to submitting the IBR application to within 60 days before the end of the annual payment period?

Thank you!