The student debt crisis in the U.S. is well documented. But a lawsuit filed by federal regulators charges that borrowers’ problems are made much worse by the companies that manage their payments.

The Consumer Financial Protection Bureau, along with attorneys general from Illinois and Washington State, are suing Navient, the largest U.S. education loan servicer, and two of its subsidiaries. The lawsuits allege that Navient processed payments incorrectly, gave borrowers bad information, made it harder for them to enroll in more affordable payment plans, and failed to act when borrowers complained.

“Too many borrowers paid more for their loans because Navient illegally cheated them,” CFPB director Richard Cordray said in announcing the lawsuit Wednesday.

The CFPB is seeking restitution for borrowers harmed by Navient, though it’s not clear how much borrowers can expect, or when they will get it.

In a statement, Navient disputed the charges and said it welcomed clear guidelines on student loan servicing standards that could alleviate problems.

Long History of Loan Servicer Problems

Consumer advocates, including Consumer Reports, welcomed the CFPB action.

“For too long, students and families have been pushed deeper in debt because loan servicers like Navient have given them the runaround at every stage of repayment,” said Suzanne Martindale, a staff attorney at Consumer Reports and an expert on student loan issues. “The CFPB’s investigation reveals how devastating these servicing failures can be to borrowers.”

In the last five years, the CFPB says it has handled more than 40,000 complaints related to education loan servicing and debt collection. Last year it brought an action against Wells Fargo for its loan servicing practices, fining Wells $3.6 million. Though Wells Fargo didn’t admit or deny the allegations, it agreed to pay $410,000 to customers. The CFPB also issued a report documenting servicer problems in September. 

The problems with loan servicing exacerbate the larger problem of soaring student debt as tuition costs continue to climb into the stratosphere.

About 44 million Americans have student loans and education debt, which now totals $1.4 trillion, more than any other consumer debt except mortgages. The average 2016 graduate who borrowed for college has $37,000 in loans.

With so much debt, young people are questioning the value of a college education in the first place. In a CR nationally representative survey of 1,500 student loan borrowers, 45 percent said that knowing what they know now, their college experience wasn’t worth the cost.

And a Consumer Reports Voices survey, published on January 19, 2017, found that 34 percent of Americans are not at all confident going forward that people who want to pursue a college degree will be able to afford it.

How to Handle Problems With Your Student Loans

The Department of Education estimates that about 1 in 4 student loan borrowers is in default or late on their loans. Seventy percent of those in default are eligible for lower monthly payments on federal student loans, according to a report by the Government Accountability Office.  And yet too many aren’t learning that they have this option from their loan servicer.

If you have student loans and your servicer isn’t giving you the help you need, here’s what you can do to protect yourself:

  • Know your options. The payment options on student loans can be confusing and, as the CFPB found, student loan servicers aren’t great about helping borrowers get on a more affordable plan. Check out the CFPB’s Repay Student Debt tool, an interactive guide to help you explore your repayment options. Also use the Department of Education’s Repayment Estimator to calculate your federal student loan payments under each repayment plan. Private loans don’t offer the same consumer protections and flexible payment plans that federal loans do. But you may be able to work with the loan provider to find a more flexible payment plan or refinance your loans so that your monthly payment is lower.
  • Use the Fix It form.  Another complaint from borrowers is that applications for income-based repayment plans often go into an application abyss and take months to get processed.  In September, the CFPB created a “Fix It” form for borrowers to use to help streamline the process.
  • Check your credit report. The CFPB found that Navient gave incorrect information to credit reporting agencies. Check your report to spot problems before it hurts your credit.
  • File a complaint. If your servicer isn't helping you, you can file a complaint with the CFPB, whether you have federal or private loans. For federal loans, you can also file a complaint on the Department of Education’s loan complaint site, which was launched in July.