How student loan servicers affect tens of millions of people

Yet student loan servicers — with names like AES-PHEAA and Nelnet — play a key role in the lives of the 44 million Americans who, combined, have amassed a $1.4 trillion mountain of student debt.

[...] this week, regulators accused the largest of them, Navient, of making it harder for borrowers to repay loans by giving them flawed information, processing payments incorrectly and failing to act on complaints.

In its lawsuit, the government's Consumer Financial Protection Bureau demands restitution for affected borrowers and financial penalties from Navient, which manages $300 billion in loans.

Think of them as a liaison between a borrower and the bank or institution that extended a student loan, such as the U.S. Education Department.

The report cited troubles with payment processing, paperwork, resolution of account errors and access to alternative repayment plans.

The result was that borrowers faced the possibility of being hit with higher interest rates, "payment shock," damage to their credit records and even default, the report says.

The CFPB estimates that one in four student loan borrowers are delinquent and struggling to repay or already in default — a problem the agency says might be fueled by failures of the loan servicers.

The roughly $1.4 trillion in student debt carried by 44 million people causes delays in home ownership and limits how much people can save.

Most borrowers with federal student loans — in contrast to private-market loans — are entitled by law to make payments based on how much they earn through so-called income-driven repayment plans.