The Consumer Financial Protection Bureau, or CFPB, releases a report each October that details the complaints submitted by consumers regarding student loans. Their latest report, from 2017, states its purpose is to“compile and analyze data on student loan complaints and make appropriate recommendations to the Secretary of the Treasury, the Director of the Consumer Financial Protection Bureau, the Secretary of Education, and Congress.”
The CFPB didn’t release a report in October 2018, but LendEDU compiled one of their own, using the CFPB’s own data and performing the necessary analysis. Last year was a rough one for student loan companies; Navient, one of the largest student loan servicers in the United States, found itself at the center of a lawsuit alleging misleading and even illegal practices.
While the CFPB’s report is still missing in action, LendEDU’s analysis offers an idea of where the student loan industry is, and where it’s headed. Between the dates of January 1, 2018 and December 19, 2018, there were 9,946 student loan-related complaints submitted to the CFPB. LendEDU analyzed each to uncover 2018 student loan trends like the most common issue, the most complained about company, and breakdowns of both federal and private student loan complaints.
A Quick Snapshot of Student Loan Complaints Filed in 2018
Of the nearly 10,000 student loan-related complaints filed with the CFPB between January 1, 2018 and December 19, 2018, 8,340 of them were loan-specific. Sixty-four percent of them pertained to federal student loans, and 36 percent dealt with private student loans.
The rate of complaints, measured against the U.S. population, came out to 26 student loan-specific complaints per one million residents. Further, the student loan company racking up the most complaints in 2018 was Navient.
A Rundown of the Federal Student Loan Industry
While the federal government guarantees and offers student loans, servicing companies—such as Navient, Nelnet, and many others—do the day-to-day work of collecting payments, handling customer service, and other operational details once the loan is disbursed.
Some student loan servicers have a less-than-stellar reputation; a full 42% percent of the federal student loan complaints were made against Navient. AES/PHEAA was in second place with 25% of the complaints. What this boils down to is that two federal student loan servicers were responsible for 67% of all complaints made to the CFPB.
Several states filed suit against Navient in 2018, alleging that the company trapped borrowers in costly repayment programs, incorrectly applied payments, or in some cases didn’t apply the borrower’s payment to their balance at all. A judge recently denied Navient’s request to dismiss Pennsylvania’s lawsuit, filed by the state’s Attorney General. Even the CFPB itself is currently suing Navient regarding their business practices.
Navient also scored the highest number of complaints per one million borrowers, with over 336 complaints for every million student loans. AES/PHEAA was in second with 170.40, with Nelnet and Great Lakes bringing up the third- and fourth-place spots at 79.72 and 27.27 complaints per million loans, respectively.
When it came to complaint type, borrowers generally had one of three major issues with the ten most complained about companies:
- Dealing with the lender or servicer
- Struggling to repay the loan
- Problems with their credit report or credit score
A full 70 percent of the complaints were specific to dealing with the servicing company. Twenty percent of borrowers complained that they were having problems repaying the loan, with ten percent citing credit reporting issues as their main complaint.
When combining federal and private loans, Navient was the most complained-about loan servicer in 47 states.
A Rundown of the Private Student Loan Industry
Unlike federal loans, private student loans are funded by financial institutions as opposed to the government. Many of the same servicers, however, work in the private sector as well; Navient, for instance, factors heavily in the complaints regarding private loan companies.
Issues are also much the same for private student loan borrowers. For example, they cite dealing with the lender or servicer as their biggest problem. Thirty-one percent of complaints dealt with repayment problems, and six percent with credit reporting. Private student loans also had one other category of complaint—getting a loan at all.
Michael Brown - Guest Contributor
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