The Consumer Financial Protection Bureau (CFPB) provided an update on its oversight of student loan servicing practices in the early months of the resumption of federal student loan repayments.
After a three year pause on student loan repayments following the COVID pandemic, payments resumed last fall. In its analysis, the CFPB uncovered several concerns with how borrowers are being serviced.
“The resumption of student loan payments means that borrowers are making billions of dollars of payments each month,” CFPB Director Rohit Chopra said. “If student loan companies are cutting corners or sidestepping the law, this can pose serious risks to individuals and the economy.”
Among the concerns, the CFPB found that borrowers are encountering long hold times when trying to reach their student loan servicer. Specifically, it found that borrowers are frequently forced to wait on hold for more than an hour when calling their servicer, and many give up without ever receiving assistance. Many loan servicers dramatically reducing staffing during the pandemic but have not staffed back up to meet borrower demand. As a result, the average call wait time to speak to a live representative has gone to over 70 minutes as of October 2023. This has resulted in almost half of all calls being abandoned.
The bureau has also seen significant delays in processing income-driven repayment plan applications. As of late October, servicers reported more than 1.25 million pending income-driven repayment plan applications – with more than 450,000 of those applications pending for more than 30 days with no resolution.
In addition, they have encountered inaccurate and untimely billing statements. Errors include listing premature due dates before the end of the payment pause, inflating monthly payment amounts due to the use of outdated poverty guidelines, or using the incorrect income.