Between March 2016 and February 2017, federal student loan borrowers submitted over 11,000 complaints to the Consumer Financial Protection Bureau regarding the servicing of their loans. That’s somewhere in the vicinity of 30 complaints per day.
In the CFPB report published last Thursday, the Bureau cites “problems with payment processing, billing, customer service, borrower communications and income-driven repayment (IDR) plan enrollment.”
Perhaps most notable was the report’s focus on students enrolled – or should I say, thought they were enrolled – in the Public Student Loan Forgiveness (PSLF) program. Of the complaints, 10 percent were filed by borrowers who worked in the public sector and were, in one way or another, misled by their student loan servicer.
The big issues
Communication topped the charts for most frequent grievance. According to the report, 18 percent of all federal loan complaints referenced problems getting accurate and comprehensive information from their servicer.
Lack of communication often results in borrowers either missing payments or, in some cases, not even understanding their enrollment plan. Such was the case with students attempting to enroll in income-driven repayment, who accounted for 13 percent of those who filed complaints.
This isn’t a new thing, but it doesn’t bode well that over and over again we hear about kids getting duped by their student loan servicer.
The importance of PSLF
Also among the top complaints were those made by students who believed they qualified for student loan forgiveness due to their decision to work in the public sector.
Passed in 2007, the PSLF program grants students working for the government or qualifying non-profit entities to have the remainder of their loans forgiven after they make a certain number of payments. With the cost of college rising and wages in those fields being so much competitively smaller, the government wanted to do something to incentivize people to work as public servants.
It was a huge hit, and now it’s blowing up in everyone’s faces.
Due to miscommunication – are you sensing a theme? – over the exact requirements of the program, students who thought they were eligible are finding themselves in $80,000 of debt with $40,000 salaries and a big REJECTED stamp on their applications.
This, for obvious reasons, is a huge problem. Aside from the terribly shaky financial futures of the students already caught up in this mess, let’s see how easy it is to staff the Defense Department when no one younger than 35 wants a government job.
More than 320 companies affiliated with student loans – including the servicers, collectors, and lenders – were named in the complaints submitted to the CFPB.
One company, Navient, was especially popular amongst the disgruntled. Navient was the subject of over 4,600 federal complaints and more than 3,100 private complaints. Take a bow. Really.
Also listed atop the list were AES/PHEAA, Sallie Mae, Great Lakes, Wells Fargo and Discover. In other words, the biggest names in the business.
Diligence is key. When taking out a student loan ensure you know the specifics of your plan. Not all repayment plans are made equal, so it’s not just about finding the best deal but also a company you can trust.
This is also not to say you should give up on the public sector. We need people fighting the good fight, and more importantly, we need people to put out the garbage fire so effortlessly destroying our country. So if that’s your calling, you go ahead and follow it.
Just make sure you know how to pay back your loans because you’re not getting any help from Uncle Sam.
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