With rising student loan interest rates in the news lately, it is fitting that the Consumer Financial Protection Bureau (“CFPB”) recently issued a mid-year report on student loan complaint data. The Dodd-Frank Act established a “student loan ombudsman” within the CFPB, with the responsibility to “compile and analyze data on consumer complaints regarding private student loans and make appropriate recommendations to the Secretary of the Treasury, the Director of the [CFPB], the Secretary of Education, and Congress.” The CFPB began accepting consumer complaints about private student loans in March 2012. Data about private student loan complaints were added to the CFPB’s public consumer complaint database in March 2013.
Key findings in the mid-year report reveal that outstanding student debt is approaching $1.2 trillion, including approximately $165 billion in outstanding private student loan debt. The report shows relatively steady complaint volume over the reporting period, with approximately 2,000 total complaints. Nearly 75% of the student loan complaints were directed at eight companies. The largest subset of consumers complain that they are unable to modify repayment terms, either to decrease monthly payments during hardship periods, or to reflect the borrower’s improved credit profile. Additionally, consumers raised concerns about other servicing issues, including payment processing problems, lack of required notices, and cosigner issues.
Finally, the CFPB noted that it continues to receive complaints from servicemembers having trouble accessing rate relief under the Servicemembers Civil Relief Act (“SCRA”). The CFPB report notes that the bureau will coordinate with the Department of Justice regarding these potential violations.
For financial institutions engaged in education lending, it is important to review your procedures and policies for trouble-spots that are highlighted in the CFPB’s mid-year report. Contact Spilman or other knowledgeable counsel to discuss the contents of the report and its impact on your organization.