Individuals with student loans who have started making payments again are facing a number of hurdles, such as waiting on hold for as long as 70 minutes to speak to a representative and receiving billing statements that are untimely and inaccurate, according to a report released last week by the Consumer Financial Protection Bureau.
The Background: Individuals with unpaid federal student loans started making payments again in October, after a three-year moratorium that was instituted at the onset of the COVID-19 pandemic. Restarting an operation this size — there are 22 million individuals with federal student loans — was bound to have some hiccups, and the Department of Education has already taken swift action, withholding millions of dollars in payments intended for servicers because they have not sent billing statements in a timely manner. But, according to the CFPB, the problem goes much deeper.
Why This Matters: Reports like this are the canary in a coal mine — a precursor to enforcement actions. And the CFPB did not pull any punches in noting the conclusions of its report.
- “If student loan companies are cutting corners or sidestepping the law, this can pose serious risks to individuals and the economy,” CFPB Director Rohit Chopra said in a statement.
By the Numbers: The average hold time for an individual to speak with a live representative increased to 70 minutes in October, from 12 minutes in August, when the moratorium was still in place, according to the CFPB. Almost half of all calls were abandoned in October, up from 17% in August.
- About one-third of the 1.25 million pending income-driven repayment applications have been pending for at least 30 days, according to the CFPB. Some servicers are taking five times longer than their counterparts to review and make decisions on applications.
