Student Loan Servicing Complaints: AR 2019 by CFPB Ombudsman Released

CFPB PRIVATE EDUCATION LOAN OMBUDSMAN ISSUES 

2019 ANNUAL REPORT

On October 15, 2019 the Consumer Financial Protection Bureau Private Education Loan Ombudsman issued the 2019 Annual Report reflecting that from September 1, 2017 through August 31, 2019 the Bureau handled approximately 20,600 complaints related to private or federal student loans. Of these, there were approximately 6,700 private student loan complaints and 13,900 federal student loan complaints. The report also provides policymakers with a series of recommendations.

The 52-page Annual Report of the CFPB Ombudsman is posted at the following URL:
https://files.consumerfinance.gov/f/documents/cfpb_annual-report_private-education-loan-ombudsman_2019.pdf. 

Executive summary

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, this report analyzes complaints submitted by consumers from September 1, 2017, through August 31, 2019. (A report was not submitted in 2018.) During this time period the Bureau handled approximately 20,600 complaints related to private or federal student loans – approximately 6,700 private student loan complaints and 13,900 federal student loan complaints. The Bureau handled an additional 4,600 debt collection complaints with a student loan related subproduct.

1. Regarding private student loans, for the year ending August 31, 2018, the Bureau handled approximately 3,800 private student loan complaints, a decrease of approximately 50 percent compared to that of the previous year (2017). For the year ending August 31, 2019, the Bureau handled approximately 2,900 private student loan complaints, a decrease of approximately 25 percent compared to that of the previous year (2018).

2. Regarding federal student loans, for the year ending August 31, 2018, the Bureau handled approximately 7,200 federal student loan complaints, a decrease of approximately 44 percent compared to that of the previous year (2017). For the year ending August 31, 2019, the Bureau handled approximately 6,600 federal student loan complaints, a decrease of approximately 8 percent compared to that of the previous year (2018).

Over the past 24 months the Bureau handled approximately 4,600 debt collection complaints related to private or federal student loans, approximately 18% of student loan complaints and debt collection complaints about student loans. Over the past 24 months federal and state law enforcement agencies, including the Bureau, FTC, Department of Education and state Attorneys General Offices have successfully brought numerous enforcement actions against student loan debt relief companies with judgments totaling hundreds of millions of dollars. A single unscrupulous student loan debt relief company may negatively impact thousands, if not tens of thousands, of borrowers.

Policymakers, federal and state law enforcement agencies, and market participants may wish to consider reinforcing the success of the enforcement actions against student loan debt relief companies by formalizing the collaborative and cooperative enforcement efforts against unscrupulous actors in the market place and expanding beyond civil enforcement actions to criminal enforcement actions at all levels. In assessing and considering formalization of these efforts, actions to consider include the sharing of information, sharing data analytic tools, creating task forces, deciding how to best task organize, and determining how to best synchronize and deconflict resources and expertise to achieve the maximum benefit for the consumer.