WASHINGTON — The Consumer Financial Protection Bureau (CFPB) has published a new report on its oversight of student loan servicing practices in the early months of the resumption of federal student loan repayments, saying it has found long hold times, inaccurate billing statements, and processing delays, among other issues.
The CFPB said it has been closely monitoring student borrowers’ experiences during the return to repayment, using consumer complaints to identify emerging problems and using its supervisory authority to examine loan servicer conduct and performance. Among the issues it identified:
Long Hold Times & Abandoned Calls
The CFPB said its report foundborrowers 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 servicers were able to boost their financial performance by dramatically reducing staffing during the pandemic.
“However, servicers have not met the foreseeable borrower demand for help with their loans. Average call wait times to speak to a live representative have risen from 12 minutes in August 2023 to over 70 minutes in October 2023,” the Bureau stated. “As a result, nearly 30% of calls were abandoned in October 2023, compared to only 10% in August 2023. This is leaving borrowers unable to fix errors, get answers to questions, or enroll in an affordable repayment plan or cancellation plan.”
Significant Delays in Processing Income-Driven Repayment Plan Applications
According to the Bureau, millions of income-driven repayment plan applications were submitted between August and October 2023. 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, the CFPB said.
“Processing times vary across servicers, with some servicers taking five times longer than others to process applications,” the Bureau stated. “These delays put borrowers at risk for making significantly higher payments than they can afford.”
Inaccurate and Untimely Billing Statements
“Borrowers are receiving faulty and confusing bills from servicers,” the CFPB said. “Errors include listing premature due dates before the end of the payment pause, inflating monthly payment amounts due to the servicer using outdated poverty guidelines, or using the incorrect income when calculating a borrower’s new income-driven repayment plan payment. These mistakes can cause significant borrower confusion, and can further strain the servicers’ resources by forcing borrowers to contact their servicer to resolve the errors.”
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