The Consumer Financial Protection Bureau on Friday released its annual report on student loan servicing, revealing systemic failures and persistent errors by servicers that are continuing to impact millions of student borrowers.
Driving the news: The CFPB report highlights a spike in consumer complaints against loan servicers, showing the highest volume since the bureau began collecting complaints in 2012. From July 1, 2023, to June 30, 2024, the CFPB received more than 18,000 student loan complaints — with many detailing payment processing errors, inaccurate information, and frustrating “doom loop” experiences with customer service.
- Borrowers reported issues such as unexpected amounts being withdrawn from accounts, delays in processing applications for income-driven repayment (IDR) plans, and months-long waits for refunds. These errors are jeopardizing borrowers’ financial well-being, with some even missing out on critical benefits like Public Service Loan Forgiveness (PSLF).
- One borrower highlighted in the report waited nine months to receive a $60,000 refund, while another described repeated unsuccessful attempts to enroll in the new Saving on a Valuable Education (SAVE) repayment plan.
What they’re saying: CFPB Director Rohit Chopra criticized the servicers’ continued failures, stating, “Student borrowers continue to face lengthy delays and costly errors because of servicer failures. The CFPB is working to ensure there is greater accountability and improvements in the student loan system.”
The details: The report also underscores broader systemic issues in the student loan servicing ecosystem:
- Servicer failures: The report attributes many borrower hardships to basic servicing errors, like incorrect payment amounts and delayed income-driven repayment recertification.
- Customer service issues: Borrowers often reported being trapped in “doom loops” — endless cycles of being redirected between websites and phone numbers without receiving real help. Many experienced months-long delays before their issues were resolved.
- Legal challenges and policy disruptions: Legal challenges have delayed the implementation of critical relief programs, like the SAVE plan, which has left many borrowers in administrative limbo without access to promised benefits.
What’s next: The CFPB Ombudsman recommends several reforms, including holding servicers accountable for their performance failures and ensuring borrowers aren’t penalized for servicer mistakes. The report calls on policymakers to act swiftly to implement systemic changes that reduce the burden of student debt.
