CFPB Sees Significant Spike in Student Loan Complaints

By Brittany Hackett, Communications Staff
 
Student loan complaints are up over 300 percent from this time last year, with grievances pertaining to student loan providers or servicers topping the list, according to a report from the Consumer Financial Protection Bureau (CFPB).
 
The CFPB’s most recent Monthly Complaint Report was issued at the end of April, and included student loans as the featured product for the first time since the CFPB began to handle federal loan complaints in February 2016. 
 
According to the report, student loan complaints are up 325 percent from January through March 2016 to the same time period in 2017, from 722 complaints to 3,204 complaints. The increase, CFPB notes, may be attributed to the fact that the Bureau began taking federal student loan complaints during that time last year, as well as the CFPB lawsuit against Navient filed in January 2017. In the lawsuit, CFPB accuses the student loan servicer of “systematically and illegally failing borrowers at every stage of repayment,” according to a press release from CFPB. 
 
In fact, Navient was the most-complained-about company from November 2016 through January 2017, according to the report, receiving an 813 percent increase in complaints over the same time period in the previous year. But Navient was not alone among student loan servicers who received complaints --  they were followed by AES/PHEAA, Nelnet, and Sallie Mae for the top four most-complained-about student loan servicers. Great Lakes, Wells Fargo, ACS Education Services, and Transworld Systems, Inc., rounded out the bottom four.
 
Consumers were more likely to file complaints with the CFPB about non-federal student loans (64 percent) than federal student loans (36 percent). Most student loan complaints – 64 percent – fell under the category of “dealing with my lender or servicer,” followed by 33 percent who cited “can’t pay my loan,” and only 3 percent who complained about “getting a loan.”
 
Several specific situations were highlighted in the report, including:
 
  • Servicers providing distressed borrowers with information on forbearance or deferment instead of repayment options like income-driven repayment;
  • Difficulties with enrollment in income-driven repayment due to things like lost documentation, extended application times, and unclear guidance on switching to more beneficial repayment programs;
  • Insufficient information from servicers when borrowers try to recertify their incomes for income-driven repayment programs;
  • Misapplied payments, issues with the Public Service Loan Repayment (PSLF) program, and incorrect reporting to the credit reporting companies; and 
  • Issues with how private student loan payments are handled, including misapplied payers and inaccurate accounting of payments.
 
The report also breaks down student loan complaint volume by state, showing that Louisiana (846 percent), Washington (732 percent) and Kansas (691 percent) had the greatest percentage increase in student loan complaints in the given time period. Delaware (100 percent), Utah (57 percent), and Wyoming (0 percent) experienced the smallest percentage increase.

 

Publication Date: 5/12/2017


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