Continuing Student Loan Servicing Complaints

According to a recent press release from the Consumer Financial Protection Bureau (CFPB), millions of consumers have filed complaints about student loan servicing practices. The CFPB’s “monthly complaint snapshot” for April underscored “that both private and federal student loan borrowers nationwide report persistent servicing breakdowns that may sideline their path to repayment.” In other words, student loan borrowers have continued to file complaints with the CFPB about problems with the companies servicing their student loans. In some cases, it is possible that student borrowers are protected by the Fair Debt Collection Practices Act (FDCPA).
We often read about student loan complaints when it comes to private lenders. However, as the recent press release emphasizes, student loan borrowers are having difficulties with servicers linked to private and federal loans alike. To better understand the nature of the complaints, we would like to take a closer look at the CFPB’s monthly complaint snapshot.
Complaints About Student Loan Servicers
As the press release highlights, student loan debt is currently at around $1.4 trillion, which makes it the “U.S.’s second largest debt market behind mortgages.” There are more than 44 million student loan borrowers in the country, and each of them relies upon student loan servicers in a variety of capacities, including repayment management. More than 64% of all complaints about student loans concerned servicers and servicing practices.
What did the student loan borrowers complain about to the CFPB? Borrowers have indicated that they are not properly informed about options for repayment, especially concerning income-driven repayment options. Consumers also complained that student loan servicers suggested that go into repayment plans that “suspend repayment and cause the interest on their loans to pile up.” In addition, borrowers indicates that servicers have misapplied monthly student loan payments, which have led to additional problems such as “negative credit reporting and loss of certain loan benefits, such as cosigner release for private student loans.”
Problems with Income-Driven Repayment Plans
The CFPB also received numerous complaints from consumers about the difficulty associated with either enrolling in an income-driven repayment plan or being able to stay in one. For instance, consumers complained primarily about the following:
  • Processing delays in applications for income-driven repayment plans; and
  • Inaccurate denials for income-driven repayment applications.
Student loan borrowers indicated that servicers lost documents associated with income-driven repayment applications, that application processing times took several months, that they were told they missed payments toward loan forgiveness, and that guidance has been lacking in terms of enrollment in new income-driven repayment plans. Borrowers also complained that they received “insufficient information from their servicers to meet recertification deadlines for their income-driven repayment plan.”
Loan Forgiveness Complaints
In addition to the complaints described above, consumers also contacted the CFPB concerning public service loan forgiveness and their federal student loans, as well as other loan forgiveness programs. In short, borrowers alleged 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 Public Service Loan Forgiveness.” The CFPB received other complaints about loan forgiveness options, too.
What were the companies that borrowers complained about most often? The press release cites the following:
  • Navient Solutions, LLC;
  • Fedloan Servicing/AES; and
  • Nelnet.
Seek Advice from an Oak Park Consumer Protection Lawyer
Do you have concerns about student loan management, or have you experienced problems with a student loan servicer? An experienced Oak Park consumer protection lawyer may be able to help. Contact the Emerson Law Firm today to discuss your options.
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