RSSThe Consumer Financial Protection Bureau has issued the latest monthly report drawn from its online complaint database. The bureau used the occasion to focus on complaints and issues dealing with student loans. According to the report, found here, student loan complaints are increasing as student loan debt becomes a larger issue for Americans.
According to the report, student loan debt represents the country’s second largest debt market, with only mortgages being larger. Student loan debt nationally is $1.4 trillion. More than 44 million student loan borrowers deal with servicing companies to manage all aspects of repayment, including providing borrowers with available repayment options when they are struggling to repay their loans. As of last month, the bureau had handled approximately 44,400 student loan complaints from consumers. 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. This report states that while there has been some improvement, there are still glaring issues.
The CFPB reports that 64 percent of complaints are about problems consumers experience when dealing with their student loan servicer. Consumers who contact their servicer complain that they are not informed about payment options such as income-driven repayment plans. Instead, there were many reports of consumers being steered into programs that merely suspended payments. The CFPB claims servicers do this to cause the interest on loans to accumulate.
Many borrowers also complain that their monthly 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.”
Borrowers also expressed 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 such a plan. Other borrowers complain that their servicer did not explain that consolidating their loans would wipe out all previous progress made towards loan forgiveness.
The CFPB report included additional details dealing with the “unique challenges that certain populations” face with their student loans, including older people, veterans, and borrowers who have previously defaulted.
The report also noted that the servicer that received by far the most complaints was Navient, the subject of a CFPB lawsuit in January.
