A new report shows both private and federal student loan borrowers nationwide report persistent servicing breakdowns that may sideline their path to repayment. As of April 1, the Consumer Financial Protection Bureau (CFPB) has handled more than 1.1 million consumer complaints across all products, to-date.
At $1.4 trillion, student loan debt represents the U.S.’s second largest debt market behind mortgages. More than 44 million student loan borrowers rely on the companies servicing their loans to manage all aspects of repayment, including providing borrowers with available repayment options when they are struggling to repay their loans. In September 2015, the CFPB released a report outlining widespread servicing failures and sloppy, patchwork practices reported by both federal and private student loan borrowers. As of April 1, the Bureau had handled approximately 44,400 student loan complaints from consumers.
Some of the findings in the snapshot include:
▪ Consumers complain about poor information from and sloppy practices by servicers: Of all the complaints the Bureau receives about student loans, over half—64 percent—are about problems consumers experience when dealing with their student loan servicer. Consumers who reach out to their servicer complain they are not informed about options that would allow them to continue repaying their loan, such as income-driven repayment plans. Rather, consumers complain that their servicer directs them into plans that suspend repayment and cause the interest on their loans to pile up. Consumers also complain that their monthly student loan payments are misapplied by the servicer, which the Bureau believes can cause a range of problems including negative credit reporting and loss of certain loan benefits, such as cosigner release for private student loans.
▪ Consumers complain about difficulty enrolling and staying in an income-driven repayment plan: Consumers complain about processing delays and inaccurate denials when submitting an income-driven repayment plan application to their servicer. These complaints include documents being lost by the servicer, application processing times spanning several months, missed payment towards loan forgiveness, and unclear guidance when enrolling into a new income-driven repayment plan. Additionally, consumers complain of receiving insufficient information from their servicers to meet recertification deadlines for their income-driven repayment plan.
▪ Consumers report confusion about their progress toward Public Service Loan Forgiveness programs: Consumers express concerns about their standing in Public Service Loan Forgiveness and other loan forgiveness programs. These borrowers complain that after years of making payments, they learn that their loans are not enrolled in a qualifying repayment plan, despite borrowers telling their servicers that they were pursuing Public Service Loan Forgiveness. Other borrowers complain that their servicer did not explain that consolidating their loans would wipe out all previous progress made towards loan forgiveness.
▪ Companies with the most student loan-related complaints: The three companies that the Bureau has received the most average monthly student loan complaints about are Navient Solutions, LLC, Fedloan Servicing/AES, and Nelnet.
To submit a complaint, consumers can:
▪ Go online at www.consumerfinance.gov/complaint
▪ Call the toll-free phone number at 1-855-411-CFPB (2372) or TTY/TDD phone number at 1-855-729-CFPB (2372)
▪ Fax the CFPB at 1-855-237-2392
▪ Mail a letter to: Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, Iowa 52244
▪ Additionally, through “Ask CFPB,” consumers can get clear, unbiased answers to their questions at consumerfinance.gov/askcfpb or by calling 1-855-411-CFPB (2372).