CFPB Analyzes Complaints on Student Loans
The Consumer Financial Protection Bureau has released a mid-year update that analyzes complaints from private student loan borrowers from October 2012 through March 2013. This identifies some of the challenges consumers face when dealing with their lenders and servicers.
The CFPB estimates that outstanding student loan debt is approaching $1.2 trillion. Approximately $165 billion, or nearly 14%, is private student loan debt.
The report shows that the private student loan market has a disproportionate use by high-debt borrowers. For borrowers graduating at the time of the financial crisis with over $40,000 in student debt, 81% used private loans.
The CFPB received over 2,000 complaints over this six-month period. Nearly 40% of those complaints involved loans from Sallie Mae.
The largest subset of complaints was that consumers were unable to modify the terms of their loan. It is difficult to modify terms during financial hardships or to get better terms that reflect the borrower’s improved credit profile and creditworthiness. They also complained about servicing problems and difficulty obtaining accurate information about student loan status and repayment options.