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Each October, the Consumer Financial Protection Bureau (CFPB) released a report that detailed student loan-related complaints submitted to its own database throughout the year.
The purpose of this report was detailed in their 2017 version, the most recent publication: The Dodd-Frank Wall Street Reform and Consumer Protection Act (Act) established a Student Loan Ombudsman within the Bureau. Pursuant to the Act, the Ombudsman shall compile and analyze data on student loan complaints and make appropriate recommendations to the Secretary of the Treasury, the Director of the Consumer Financial Protection Bureau, the Secretary of Education, and Congress.
When October rolled around this year, there was no student loan report released by the CFPB and there has still yet to be one.
In the absence of 2018’s report, LendEDU has compiled this year’s student loan grievances from the same CFPB complaint database and conducted our own analysis. To fill this year’s void, much of what you will find below was influenced by previous CFPB student loan complaint reports.
Between the dates of January 1, 2018 and December 19, 2018, there were 9,946 student loan-related complaints submitted to the CFPB. LendEDU analyzed each to uncover 2018 student loan trends like the most common issue, the most complained about company, and breakdowns of both federal and private student loan complaints.
Student Loan-Specific Complaint Data
The CFPB organizes the complaint database in a way that breaks student loan-related complaints into two different products. The first being complaints directly related to either private student loans or federal student loans. The second being complaints related to debt collection for either private or federal student loans. The former will be discussed first.
An Overview of Student-Loan Specific Complaints in 2018
Between January 1, 2018 and December 19, 2018, there were 8,340 student loan-specific complaints filed with the CFPB. Of those, 64 percent pertained to federal student loans, while 36 percent dealt with private student loans.
Taking into account the entire U.S. population, there were 26 student loan-specific complaints per one million U.S. residents. Further, the most complained about student loan company was Navient, which has had its fair share of problems in the last few years.
Companies With the Most Federal Student Loan Complaints Ranked by Volume
Companies that act as federal student loan servicers, like Navient and Nelnet, play the role of intermediary between the borrower and the federal government. This company will handle the billing, repayment process, and any other services needed by the consumer or required by the Department of Education.
Not surprisingly, Navient once again led the way this year when it came to the most complained about federal student loan companies; 42 percent, or 2,239 complaints, of the 5,362 federal student loan complaints were lodged against Navient. AES/PHEAA was the closest pursuer, representing 26 percent, or 1,399 complaints, of all federal student loan complaints.
Just a few days ago, a U.S. district court judge shot down a request by Navient to have a lawsuit dismissed. The suit, filed by Pennsylvania Attorney General Josh Shapiro, alleges Navient violated state law by pushing borrowers towards costly repayment programs. The company is also dealing with lawsuits from California, Illinois, and the CFPB itself.
Companies With the Most Federal Student Loan Complaints Per Million Loan Recipients
Since some student loan servicing companies are far bigger than others, it could be deemed unfair to single out one company for having more complaints than another company simply because it deals with more borrowers.
To mitigate this, LendEDU has put together a table that ranks the four federal servicers that received the most complaints in 2018 after each company’s complaint data was normalized by the number of borrowers that each institution handled.
In terms of the number of recipients each company serviced in 2018, the most up-to-date data was found at the Department of Education’s Federal Student Aid website here.
LendEDU took the respective total number of complaints at AES/PHEAA, Great Lakes, Nelnet, and Navient (found in graphic above), divided that number by the loan recipient volume at each company, and multiplied the result by one million to get the number of federal student loan complaints per one million loan recipients.
Most Common Federal Student Loan Issues Ranked by Volume
When submitting a complaint, consumers can note the specific issue they had with their federal student loan. The three main issue options are “dealing with lender or servicer,” “struggling to repay a loan,” and “problem with credit report or credit score.”
It is worth noting that there are a few other issue options related to credit reporting. LendEDU has consolidated all of those under the “problem with credit report or credit score” label for simplicity.
Issues Identified in Federal Student Loan Complaints for 10 Most Complained About Companies
Now that we have talked about the ten student loan companies with the highest volumes for federal student loan complaints, in addition to the proportion of total federal complaints claimed by the three major issues, it is time to combine the two.
In the graphic below, you will see the percentage that each major issue claims when it comes to all of the federal student loan complaints at the ten companies that received the most federal student loan complaints. It is the same ten companies as those found in the second graphic.
Companies With the Most Private Student Loan Complaints Ranked by Volume
The next three sections of this report will be very similar to the previous three, except the private student loan industry will be the focus this time around.
Private student loans differ from federal student loans in that they are funded by banks, credit unions, or specialty lenders, not by the government. This means that private student loan interest rates are set by each lender and are usually based on the borrower’s credit history and earnings potential, among other things. Federal student loan interest rates, for reference, are set by Congress each year.
>> Read More: Student loan interest rates
The CFPB consumer complaint system for private student loans works exactly the same as it does for federal student loans. Coincidentally, you will notice that many of the companies that received the brunt of federal student loan complaints are featured heavily in the private student loan section, like Navient, AES/PHEAA, and Nelnet. There are some newcomers that do not deal with federal student loans, like SoFi, Discover, and Wells Fargo.
Most Common Private Student Loan Issues Ranked by Volume
When it comes lodging a private student loan complaint with the CFPB, the borrower can choose from the exact same three issue types as federal student loan complaints plus one more: “getting a loan.”
Why would this be a complaint for private student loans and not federal student loans? Federal student loans are readily available and just about any student can take one out, poor or wealthy. Contrarily, private student loan lenders can be very picky about who they take on as a borrower; as a result, rejection is much more commonplace in the private student loan market.
Issues Identified in Private Student Loan Complaints for 10 Most Complained About Companies
Once again, this last graphic pertaining to private student loan complaints in 2018 combines the previous two sections in this report. We have visualized the ten most complained about student loan companies from last year and laid out the most common issues amongst borrowers when it comes to private student loans.
Now it is time to combine the two to see the most prevalent issues at some of the biggest private student loan companies in the country.
A State-by-State Breakdown of 2018’s Student Loan Complaints
The last section of this part of the report will breakdown the federal and private student loan CFPB data on a state level. For each state and Washington D.C., you will be able to see the total amount of student loan-specific complaints lodged in that state, the proportion of both federal and private complaints in that state, the most complained about company in each state, and the complaints per million residents based on each state’s respective population.
Not surprisingly, the states that received the most complaints were the largest with the most institutions, like California, New York, Pennsylvania, and Texas. Also not surprisingly, Navient was the most complained about company in 46 states.
Some trends of note included Washington D.C. having the highest rate of complaints per million residents and AES/PHEAA being the only other student loan company mentioned not named Navient. Being that the CFPB is headquartered in Washington D.C., perhaps more borrowers are familiar with the organization and its complaint process, making it more likely for them to submit a complaint.
Debt Collection-Specific Complaint Data
As it was mentioned earlier, the CFPB consumer complaint database breaks student-loan related complaints into two different products. The first being what we already discussed, complaints pertaining directly to the student loan. The second will be featured now and relates only to complaints regarding the debt collection practices for student loans.
Companies With the Most Student Loan Debt Collection Complaints
The following graphic will depict the private student loan companies that received the most student loan debt collection complaints in 2018. There are three tabs: (1) Most Federal Student Loan Debt Collection Complaints; (2) Most Private Student Loan Debt Collection Complaints; (3) Most Total Student Loan Debt Collection Complaints.
If you guessed that Navient would be the most complained about company in all three tabs, you were correct. The next two spots shuffled just a bit between two companies; AES/PHEAA was second when it came to federal, while Transworld Systems, Inc. was second for private and total.
Generally, federal student debt collection complaints were more prevalent then private student debt collection complaints as the figures were a bit higher from top to bottom.
Distribution of Loan Type For Student Loan Debt Collection Complaints For Companies That Received Most Total Complaints
The last section of this report will reveal the proportion of both federal student loans and private student loans when it comes to student loan debt collection complaints.
Featured in the graphic below are the ten companies that received the most total student loan debt collection complaints (third tab in graphic above) and the percentage of each company’s total complaints that are private or federal.
Interestingly, there was no noticeable trend when it came to student loan debt collection complaints being either federal or private for specific companies. However, evaluating the data on an overall basis gave us a near even split between federal and private.
Tips for Student Loan Repayment
Many borrowers don’t have a strong grasp of their student loan debt until after they graduate and need to begin student loan repayment. Understanding your repayment options can go a long way toward avoiding stress and student loan-related complaints.
LendEDU offers a few tips below.
Know Your Student Loan Repayment Options
Understanding your student loan repayment options is an essential part of the process. Federal student loans typically have the most options when it comes to repayment. There are a number of federal student loan repayment plans, like the standard 10-year repayment plan, the graduated repayment plan, and the extended repayment plan.
There is also an income-driven repayment plan, which will only require your monthly payments to be a reasonable percentage of your income. Remember, you don’t always have to strictly adhere to any of the above, and sometimes doing something unconventional like making biweekly student loan payments will help you pay off your student loans fast.
Familiarize Yourself With Forbearance, Deferment, and Default
When repaying your student loans, the one thing you want to avoid is student loan default, which happens when you fail to pay your student loans in accordance with the agreed-upon terms.
Sometimes, extreme financial hardship can make student loan default seem unavoidable. But even if you find yourself in that situation, communicating with your lender or servicer can go a long way toward finding a solution. Additionally, by knowing more about student loan forbearance and student loan deferment you could take advantage of your options and avoid default.
Refinance Your Student Loans
For this report, LendEDU utilized the CFPB’s “Consumer Complaint Database” to analyze the data seen above. All CFPB complaints that were pulled for this study were filed with the CFPB between the dates of January 1, 2018 and December 19, 2018. Two individual products were pulled for this report. The first being complaints pertaining specifically to either federal or private student loans. The second being complaints pertaining specifically to debt collection practices for federal and private student loans. For the former, 8,340 complaints were pulled. For the latter, 1,606 complaints were pulled.
For some of the percentages featured in this report, we rounded up to the next nearest whole number so as to include no decimals. Further, to find complaints per one million residents, LendEDU pulled the most recent population figures for each state and the U.S. as a whole and ran those numbers against the complaint totals for each respective location.
For the table in which LendEDU ranked the four federal student loan servicing companies by federal student loan complaints per one million loan recipients, the data was gathered from the Department of Education’s Federal Student Aid website. For each of the four servicers, the total number of loan recipients through September 30, 2018 were summed together. The total number of federal student loan complaints each company received was then divided by that sum and multiplied by one million to normalize the results.
LendEDU did not make any edits or corrections to the CFPB database and reported it as is. For example, if a consumer mistakenly filed a complaint as “federal” instead of “private,” we did not correct this mistake as there was no way of verifying its accuracy.
Navient has disputed the findings displayed underneath the header “Companies With the Most Federal Student Loan Complaints Per Million Loan Recipients” as incorrect. LendEDU reported the number of federal student loan borrowers being serviced by Navient as 6.6 million, which was the number provided by the Department of Education’s website. However, Navient reports that number to be about 9 million federal loan borrowers. Additionally, Navient has disputed the allegations made in the lawsuit against the company as false. Navient’s response to the allegations can be found here.
See more of LendEDU’s Research
Author: Mike Brown