The Consumer Financial Protection Bureau is tasked with leveling the playing field between everyday Americans and the large companies with whom they do business. Approximately five years ago, the CFPB created a system where people could file complaints and force companies to respond to their individual issues. Earlier today, the CFPB released its annual report on these complaints. The issues discussed regarding student loans were especially informative.
In 2016, the CFPB received over 12,000 complaints relating to student loans. Of the approximately 12,300 complaints received, 8,300 were referred to the companies for review and a response. Most consumers (67%) had issues pertaining to dealing with their lender or servicer. These complaints include issues such as making payments, getting loan information and account management. 30% of consumers filed complaints regarding issues affording their loan. Finally, 2% of consumers filed complaints about getting a loan.
The CFPB noted that in 2016 consumers, “continued to report issues involving loan servicing, including payment processing problems, difficulty in obtaining documented loan account history, inaccurate account status, and customer service experiences when inquiring on repayment options.”
The most frequent complaints dealt with issues of processing payments inaccurately. These include inaccurate accounting of payments, and misapplication of payments.
Additionally, there were numerous complaints dealing with income-driven repayment plans. Borrowers noted difficulty enrolling in income-driven repayment plans, lost documentation, extended application processing times, and unclear guidance.
There are a few important takeaways for anyone who is currently repaying their student loans.
First, if you are making the wise decision to aggressively pay off your student loans, it means you are likely paying extra towards one loan while making minimum payments on the others. If you have multiple loans with one servicer or lender, it means you may have some difficulty with this process. We suggest calling your loan servicer to find out the most effective way to make sure that your payments are applied correctly. With some lenders it might be best to make these payments electronically, while others may be more efficient doing it over the phone. This also means that when you make these payments, it is important to watch loan balances and statements for errors. Lenders do not keep themselves accountable. As a borrower you are likely the only person in a position to catch a mistake.
Second, if you are thinking about signing up for an income-driven repayment plan, it will be very important to do your homework. Processing times will be slow and the advice that you get may be suspect. Be sure you understand the differences between IBR, PAYE, and REPAYE. Your servicer may leave out important details and picking the wrong plan could cost you thousands.
Finally, it is worth noting that filing a complaint with the CFPB clearly makes a difference. Most people are able to force their lender to respond to their issues and when complaints add up it can cause action. Not only do reports like the one issued today provide insight, but the complaints also can lead to action on behalf of all consumers. Earlier this year, the CFPB filed a lawsuit against Navient for failing consumers at every step of the repayment process. These complaints can help the individual filing as well as all other student loan borrowers.