In Annual FSA Feedback Report, Customers Continue to Report Fraud, Repayment Challenges

By Allie Bidwell, Communications Staff

Thousands of students, graduates, and loan borrowers submitted complaints to the Department of Education’s (ED) Office of Federal Student Aid (FSA) in the last award year, many of which were complaints related to loan repayment and aid receipt, as well as allegations of fraud, waste, or abuse.

The first annual report from FSA’s Feedback System, released Tuesday, showed that between July 1, 2016 and June 20, 2017, customers submitted approximately 17,430 cases, the vast majority of which — 83 percent — were customer complaints. Another 13 percent (2,310 cases) were reports of suspicious activity, and just 3 percent (665 cases) positive feedback cases. The Federal Student Aid Feedback System was publicly launched in July 2016, but certain stakeholders were able to use the system prior to its formal launch — a preliminary report tracked user submissions between April 11 and Sept. 30, 2016.

Of the 2,310 reports of suspicious activity, the most frequently cited categories were alleged school fraud, including distance education fraud (35 percent), third-party debt relief fraud (21 percent), student fraud (17 percent), identity theft (15 percent), and “other” (10 percent). Of the allegations of fraud, 33 percent were related to third-party debt relief companies, 27 percent were cases of student fraud, 23 percent were cases of identity theft, 10 percent were “other” cases, 6 percent were cases of school fraud, and 1 percent were cases of servicer fraud.

“In response to the increasing number of complaints about third-party debt relief companies, we are working to protect borrowers from harm caused by these bad actors,” said FSA Chief Operating Officer A. Wayne Johnson, in a letter attached to the report. “And as the data in this report indicate, too many customers are reporting complaints related to completing the FAFSA and repaying federal student loans.”

Similar to the preliminary report, the new report released this week showed customers frequently submitted complaints related to federal loan repayment (43 percent), schools (32 percent), the federal aid receipt process (10 percent), and federal aid application or eligibility (9 percent). Each of those broad categories was then broken down into subcategories. For example, school-related complaints included those related to school quality of education, school closure, delays in receiving aid, and more.

“Hearing directly from students, parents, and borrowers and having the ability to directly address their concerns through operational improvements is extraordinarily beneficial for our customers,” Johnson said. “We are fully committed to delivering world-class customer service across every point of the student aid life cycle, as one would expect from the world’s largest single-purpose financial service organization.”

 

Publication Date: 12/14/2017

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