On January 5, 2024, the CFPB published an issue spotlight on the CFPB’s oversight of student loan servicing practices in the early months of the resumption of federal student loan repayments after over three years of a payment pause due to the COVID-19 emergency. The report shows that borrowers are encountering long hold times when trying to reach their student loan servicer, experiencing significant delays in application processing times for income-driven repayment plans, and receiving inaccurate billing statements and disclosures.
The CFPB has been closely monitoring student borrower experiences during repayment, using complaints to identify issues and its authority to supervise loan servicers. The CFPB’s issue spotlight highlights a number of key concerns such as:
Long hold times and abandoned calls. The report shows borrowers face long wait times, abandoned calls, and insufficient assistance from loan servicers. Staff reductions during the pandemic boosted servicers' finances but left them unprepared for the high demand for help. Average call wait times increased from 12 to over 70 minutes, with over half of calls abandoned in October 2023. Borrowers struggle to rectify errors, get answers, or access repayment or cancellation plans.
Significant delays in processing income-driven repayment plan applications. Between August and October 2023, millions of income-driven repayment plan applications were submitted. As of late October, servicers reported over 1.25 million pending applications, with 450,000+ pending over 30 days with no resolution. Delays in processing times put borrowers at risk of higher payments.
Inaccurate and untimely billing statements. Borrowers are getting flawed bills from servicers, including premature due dates, inflated payments due to outdated guidelines, and wrong income for repayment plan. Mistakes cause confusion and strain servicers' resources as borrowers must contact them to fix errors.
Read the CFPB’s announcement here.
The full Issue Spotlight can be found here.