A former employee at a major student-loan company says workers 'literally cannot help' some borrowers when they're in trouble: 'The idea of actually paying off a loan is virtually impossible'

Person with scissors cutting an old rotary phone with ripped papers around it 2x1 — Rachel Mendelson/Insider

A laid-off employee of student-loan company Nelnet described the process for helping borrowers.
She said in her experience resources are limited, and employees "literally cannot help" many struggling borrowers.
Borrowers have previously reported frustrating experiences getting help from their servicers.

Dozens of student-loan borrowers have told Insider of the hours-long wait times and unsatisfactory customer service they say they get when they call their loan servicer for help.

A former employee at a major student-loan company told Insider there's really not much the workers can do about it.

After being laid off from Nelnet last month, Anne — who requested to use a pseudonym for privacy — told Insider there's a very generic script workers are trained to use when a borrower calls with a complaint. Nelnet is one of the largest student-loan servicing companies in the US, with nearly 8,000 full-time employees servicing 16.8 million borrowers who hold loans issued by both the federal government and by private companies. Anne said a large part of her job was "deescalation."

"A lot of people are calling in with a problematic situation and they're very upset," Anne said. "Essentially, we say, 'Thank you for the feedback. We appreciate it. We'll try to do better in the future.' And it just doesn't feel very reassuring to the customers unless you individually put in an actual sincere apology for affecting their financial lives like that."

Nelnet did not comment on the nature of the calls it receives or the script workers are given to assist borrowers.

Insider was first to report last month that Nelnet was laying off 150 employees, according to a leaked email. The email said the job cuts were a result of lack of work caused by the over two-year pandemic pause on student-loan payments, and "a performance-based approach was used to identify impacted associates. All released associates have been notified and we are not planning further release of staff."

Anne was one of those impacted associates, and leading up to her layoff, she was working in Firstmark Services, a private student-loan division of Nelnet.

"You literally cannot help people," Anne said. "You just have to give them this verbatim script, where if a person is out of payment relief options, their credit is probably so bad that they can't get a good interest rate, and if they reconsolidate, it's going to be a higher rate and they'll end up owing hundreds of thousands of dollars more, and the idea of actually paying off a loan is virtually impossible."

Nelnet spokesperson Ben Kiser told Insider that Nelnet seeks "regular feedback from our customers to help drive improvements in our loan servicing experience."

"Feedback takes the form of customer satisfaction surveys, experience testing, and other metrics, such as Net Promoter Scores," Kiser said. "Overall, Nelnet prioritizes compliance with consumer protection requirements and specific loan program guidance."

'There were always times where we wish we could do more'

When a student-loan borrower calls in with a problem, Anne said workers are given a flow chart they have to follow to work toward the best payment relief option for the borrower. The first step workers typically do, according to Anne, is determine if there is any COVID-19 relief available for the borrower, like the pandemic payment pause. Anne said workers "exhaust" all available federal relief before putting a borrower on forbearance.

"The goal is always to make sure we're getting as much information as we need from a customer to get that done," Anne said. "If you're a good call center agent, that's what you're going to focus on."

But issues sometimes arise with transactions borrowers make to Nelnet. If a borrower has multiple student loans, for example, and a payment isn't applied correctly across that account, the error could make some of the loans appear past-due, hurting the borrower's credit report — and Anne said Nelnet does not look at payments as frequently as they should, so the errors do not get fixed automatically.

"I have seen it get overlooked before and customers have to fight for the credit reporting to get revoked," Anne said.

Nelnet did not comment on how often it checks borrowers' accounts.

Aimee, a student-loan borrower who requested her last name be withheld for privacy, can attest to this. In an email to Insider, she described her interactions with Firstmark Services as "long and frustrating" due to their inability to resolve issues with her payments that arose when she paid two months of student debt bills upfront, and her servicer interpreted that payment as only one month's worth.

"I spent hours and hours on the phone with them trying to understand why my monthly payments weren't applied to all of my accounts when I should have been ahead of schedule," Aimee said. "It took a month, they had to sift through all of my accounts manually and reapply my payments and issue a correction to my credit."

And when she thought the issue was resolved, Aimee said the same thing kept happening when she tried to get ahead of her payment schedule, and the "nightmare" lasted two years until January 2022, in which she spent at least 30 hours of her time on the phone and filing complaints.

"The biggest issue was that every time I called, the person was confused and surprised the issue was happening, would put me on hold to speak with their manager and then they'd come back to me and promise to fix it only to repeat the process over and over again," Aimee said.

Nelnet did not comment on the amount of time it generally takes to resolve account errors.

Escalating customer complaints to management can only go so far. Anne said if a customer's account was severely mismanaged, she could submit a "rush request," in which she would have to write out "incredibly detailed notes" regarding the issues the borrower was having. But Anne said that in her experience, she found it to be a multi-step process that might not match the urgency of the situation.

Nelnet's Kiser did not comment on the rush request process, but told Insider that "associates are trained to provide each borrower customer in the federal programs with all available repayment and aid benefit options based on their loan type(s), so borrowers are empowered to choose and enroll in the best federal repayment, forgiveness, or payment postponement (deferments and forbearances) option available to them based on their unique circumstances."

"The main thing was advocating for why the customer deserves a rush, and even if the customer had their payment misapplied by thousands of dollars and was severely credit reported for it, that didn't make it a higher priority than anything else," Anne said. "There were always times where we wish we could do more for people."

'Student loans are such a horrible thing'

Insider also spoke to Jo, a current Nelnet employee using a pseudonym for privacy, who said the process for helping a student-loan borrower is essentially a checklist of prompts.

"The Department of Education is just one big beast," Jo said. "They just have one big list and you gotta follow it. They have what they call the 'priority of solutions.' So when a customer calls in requesting help with their payment, you gotta tick down the list."

Jo described the typical process for interacting with customers on the federal servicing side, saying the conversation would entail offering a standard repayment plan or an income-based repayment plan, making the borrower aware of any relief options, or consolidating the loans. The conversation didn't extend far beyond that.

President Joe Biden is in the process of deciding what student-loan relief he will implement, with most recent reports saying he is considering $10,000 in forgiveness for borrowers making under $150,000 a year. Lawmakers have expressed some concerns with student-loan companies' abilities to implement that relief effectively, and Insider has previously reported on struggles borrowers have faced with repayment and the lack of help they were receiving from their servicers.

As a student-loan borrower themself, Jo said working in the industry made it clear their debt will likely never be paid off.

"I'm taking out federal loans and I'm doing it with the knowledge that I'm probably never going to pay them off," Jo said. "Student loans are such a horrible thing that often, when you get into those situations and have a chance to make it better, you're not going to know about it until it's too late and your credit is destroyed."

Got tips? Reach out to Ayelet Sheffey at asheffey@insider.com.

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