Loan servicers continue to make life difficult for borrowers
The Consumer Financial Protection Bureau (CFPB)has released its annual report about problems with student loans. Basically, companies that manage student loans (called "servicers") are making a lot of mistakes, and it's hurting borrowers.
Here are the main problems:
- Servicers mess up payments: They make billing mistakes, incorrectly take money from accounts, and don't apply payments correctly. This can cause borrowers to owe more money than they should.
- Servicers give bad information: Borrowers are getting wrong information about their loans and repayment options, which can lead to costly delays and confusion.
- Customer service is terrible: It's hard to get help from servicers. Borrowers are getting the runaround, waiting months for answers, and receiving incorrect information.
This is causing serious problems for borrowers:
- Financial hardship: People are struggling to pay their bills because of these errors.
- Delays in loan relief: A new program called SAVE was supposed to help borrowers, but it's been delayed because of lawsuits.
The CFPB wants to hold servicers accountable for their mistakes and making sure borrowers get the help they need.
Student borrowers continue to face lengthy delays and costly errors because of servicer failures, said CFPB Director Rohit Chopra. The CFPB is working to ensure there is greater accountability and improvements in the student loan system.
Our analysis of over 18,000 consumer complaints shows that servicer errors with billing, customer service failures, and incorrect repayment information are causing severe financial and personal distress to borrowers, said CFPB Student Loan Ombudsman Julia Barnard.
As the federal loan system undergoes rapid changes, it is crucial that servicers immediately address these persistent issues," Barnard said."Policymakers should ensure that student borrowers can access the loan cancellation and lower monthly payments they are entitled to and implement new accountability measures to fix these long-standing problems.
18,000 complaints
Todays report focuses on the 2023-2024 Award Year (July 1, 2023 June 30, 2024) and analyzes more than 18,000 student borrower complaintsthe highest complaint volume the CFPB has received since it began collecting student borrower complaints in March 2012.
Many of the servicer failures detailed in these complaints are persistent problems that have been well-documented by the CFPB, including errors with billing and auto pay, servicers providing incorrect information about accounts and repayment options, and months-long delays in the processing of income-driven repayment applications.
Read the full report here.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-11-15 16:40:18
