Nearly two-thirds of complaints about student loans center on “servicing breakdowns,” according to the latest installment of the Consumer Financial Protection Bureau’s monthly complaint reports.
Sixty-four percent of the 14,000 student loan complaints submitted to the bureau as of April 1 are about dealing with the 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. They also complain that monthly payments are misapplied by the servicer. This practice “can cause a range of problems including negative credit reporting and loss of certain loan benefits,” the bureau said.
Additional complaints center on difficulty enrolling and staying enrolled in income-driven repayment plans and confusion about progress toward Public Service Loan Forgiveness programs.
At $1.4 trillion, student loan debt represents the U.S.’s second largest debt market behind mortgages, and there are more than 44 million student loan borrowers.
“Student loan servicers play an important role in helping millions of people manage the loans they take out to pursue an education,” said CFPB Director Richard Cordray. “Unfortunately, borrowers continue to report difficulties and setbacks as they try to work with their servicers to manage their loan debt.”
The bureau had previously released a report in September 2015 which also covered student loan issues.
This month’s report also highlights trends seen in the 14,600 complaints coming from Nevada as of April 1. Of those complaints, 10,800 came from consumers in the Las Vegas metro area. Debt collection garnered the greatest share of complaints at 29 percent (slightly higher than the national average of 27 percent), with mortgage complaints second at 23 percent (in line with the national average).
As of April 1, the bureau had handled approximately 1,163,200 consumer complaints across all products nationally. Of the 28,000 complaints handled in March, debt collection was the most-complained-about product or service at 31 percent. Credit reporting and mortgages were next at 20 percent and 14 percent, respectively.