The Private Education Loan Ombudsman of the Consumer Financial Protection Bureau issued its annual report. The Ombudsman was created by the Dodd-Frank Act “to provide timely assistance to borrowers of private education loans.” The statutory functions and requirements of the Ombudsman include receiving and analyzing complaints, coordinating with the federal Department of Education, making recommendations to policy makers, and issuing an annual report.
The 2019 report analyzes complaints submitted to the Consumer Complaint Database from September 1, 2017, through August 31, 2019. It includes approximately 20,600 complaints related to private or federal student loans, approximately 6,700 private student loan complaints and 13,900 federal student loan complaints. In addition, the bureau handled an additional 4,600 debt collection complaints about financial products related to student loans.
The data reveals that borrowers of both private and federal student loans reported issues “dealing with your lender or servicer” in more than half of all complaints. Another third of all complaints were described as “struggling to repay your loan.” Complaints concerning credit reports or credit scores were relatively rare. Navient Corporation, which services over 25 percent of all student loans nationally, was listed in nearly half of all complaints. Overall, the aggregate number of private student loan complaints was down over 20 percent from the last report, and the number of federal loans was down almost 12 percent.
The report noted that over the past 24 months federal and state law enforcement agencies, including the CFPB, FTC, Department of Education and state Attorneys General have brought several successful enforcement actions against student loan debt relief companies with judgments totaling hundreds of millions of dollars. “A single unscrupulous student loan debt relief company may negatively impact thousands, if not tens of thousands, of borrowers,” noted the report.
The report included some recommendations. The bureau recommended that policymakers, law enforcement agencies, and market participants consider reinforcing the success of the recent enforcement actions against unscrupulous actors in the marketplace and expanding beyond civil enforcement actions to criminal enforcement actions at all levels.
In addition, the report noted that consumers of student loans are easily identified by unscrupulous entities through a variety of social media platforms, and therefore marketing compliance should be a focus.
Finally, the report recommended increased “borrower outreach and education” to help consumers protect themselves from nefarious offers and products. An appendix in the report was dedicated to identifying red flags with debt relief companies.