The CFPB has issued its April 2017 complaint report that highlights student loan complaints. The report also highlights complaints from consumers in Nevada and the Las Vegas metro area.
On June 8, 2017, from 12:00 p.m. to 1:00 p.m. ET, Ballard Spahr will hold a webinar, “CFPB Criticism of Student Loan Servicers – What’s Coming Next?” Click here to register.
General findings include the following:
- As of April 1, 2017, the CFPB handled approximately 1,163,200 complaints nationally, including approximately 28,000 complaints in March 2017.
- Debt collection continued to be the most-complained-about financial product or service in March 2017, representing about 31 percent of complaints submitted.
- Debt collection complaints, together with complaints about credit reporting and student loans, collectively represented about 65 percent of the complaints submitted in March 2017.
- Complaints about student loans showed the greatest month-over-month decrease, decreasing 20 percent from February 2017. At the same time, student loans had the greatest percentage increase based on a three-month average, increasing about 325 percent from the same time last year (January 2016 to March 2016 compared with January 2017 to March 2017). In February 2016, the CFPB began accepting complaints about federal student loans. Previously, such complaints were directed to the Department of Education. As we have noted in blog posts about prior CFPB monthly complaint reports issued beginning in April 2016, rather than reflecting an increase in the number of borrowers making student loan complaints, the increasing percentages represented by student loan complaints received by the CFPB most likely reflected the change in where such complaints were sent. For the first time, the CFPB has acknowledged the impact of such change, stating “Part of [the 325 percent year-to-year increase] can be attributed to the CFPB updating its student loan complaint form to accept complaints about Federal student loan servicing, starting in late February 2016.”
- Payday loans showed the greatest percentage decrease based on a three-month average, decreasing about 29 percent from the same time last year (January 2016 to March 2016 compared with January 2017 to March 2017). Complaints during those periods decreased from 417 complaints in 2016 to 298 complaints in 2017. In the February and March 2017 complaint reports, payday loans also showed the greatest percentage decrease based on a three-month average.
Findings regarding student loan complaints include the following:
- The CFPB has handled approximately 44,400 student loan complaints since July 21, 2011, representing 4 percent of all complaints.
- The most common issues identified in complaints involved problems dealing with lenders or servicers and being unable to repay loans.
- Federal student loan borrowers contacting servicers about financial distress complained about receiving information about hardship forbearance and deferment instead of options such as income-driven repayment plans. Borrowers also complained about difficulty enrolling in such plans and unclear guidance when seeking to switch plans.
- Federal student loan borrowers reported not receiving sufficient information from servicers to meet recertification deadlines for income-driven repayment plans. They also complained about misapplication of payments, such as payments being applied to all accounts handled by a servicer rather than specific accounts and overpayments intended to reduce the principal balance being treated as early payments that put the accounts in paid ahead status. Borrowers also reported various problems with Public Student Loan Forgiveness and other forgiveness programs, such as not being enrolled in a qualifying program despite years of making payments.
- Non-federal loan borrowers complained about misapplied payments and inaccurate accounting of payments.
- Federal and non-federal loan borrowers reported issues involving incorrect reporting to consumer reporting companies. (The CFPB does not provide enough information in the report to determine the number of complaints that involved the issues described above.)
Findings regarding complaints from Nevada consumers include the following:
- As of April 1, 2017, approximately 14,600 complaints were submitted by Nevada consumers of which approximately 10,800 were from Las Vegas consumers.
- Debt collection was the most-complained-about product, representing 29 percent of all complaints submitted by Nevada consumers, which was higher than the national average rate of 27 percent of all complaints submitted by consumers.
- Average monthly complaints received from Nevada consumers increased 17 percent from the same time last year (January 2016 to March 2016 compared with January 2017 to March 2017), lower than the increase of 19 percent nationally.