CFPB Urges Greater Accountability for Student Loan Servicers

The Consumer Financial Protection Bureau (CFPB) is urging legislators and other policymakers to make reforms that it said would improve student loan servicing.

The regulator wants to see borrowers held harmless when they encounter servicing errors, and servicers held accountable for performance failures, it said in a Friday (Nov. 15) press release outlining findings from its Annual Report of the CFPB Student Loan Ombudsman.

“Student borrowers continued to face lengthy delays and costly errors because of servicer failures,” CFPB Director Rohit Chopra said in the release. “The CFPB is working to ensure there is greater accountability and improvements in the student loan system.”

During the 12 months covered in the report, from July 1, 2023, to June 30, 2024, the CFPB received more than 18,000 complaints from student borrowers — the highest number since the regulator began collecting such complaints in March 2012, according to the release.

Common complaints from student loan borrowers include inaccurate or late statements and other problems with billing; errors with auto pay, including money incorrectly debited from accounts; failures to properly apply payments to their balances; and failures to give accurate guidance about income-driven repayment plans, the release said.

Borrowers also reported problems with servicers’ customer service. These include issues with website access; being shuffled between servicers without receiving help; waiting months for responses; and receiving miscalculated payment amounts, inaccurate due dates and other inaccurate or misleading communications, per the report.

“As the federal loan system undergoes rapid changes, it is crucial that servicers immediately address these persistent issues,” CFPB Student Loan Ombudsman Julia Barnard said in the release. “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.”

The release of this report came two days after the CFPB reported that 63% of student loan borrowers have difficulty making their student loan payments, and 37% have missed at least one payment.

The CFPB also found in its 2023-2024 Student Loan Borrower Survey that many of these borrowers don’t know they could choose a different repayment plan that could help lower their payments.