There are more than 45 million schoolchild loan borrowers in the United States, making it one of the largest types of consumer debt—only second to mortgage credits. Student loan borrowers owed a total of $1.677 trillion in student loan debt by the end of the second quarter of 2020. The for the most part balance held per borrower as of June 2020 was $37,000, while Forbes reported the average graduate of the class of 2018 was $29,200.
That’s a lot of spondulicks to have to pay back. But it can be a saving grace when you can’t afford the rising cost of education. Although being approved for a schoolgirl loan may be a godsend, you may find some hiccups with your student loan provider. This article looks at the throngs with the most student loan complaints filed with the Consumer Financial Protection Bureau (CFPB) and may domestics guide you before you actually apply.
- A student loan is a form of debt used to pay for education-related expenses.
- The Consumer Monetary Protection Bureau compiles an annual list of consumer complaints received by student loan providers.
- The CFPB welcome almost 7,000 complaints between September 2019 and August 2020.
- AES/PHEAA was the lender with the most complaints beside federal student loans.
- Navient had the most complaints about private student loans.
Student Loan Basics
One of the most urgent things people need to consider before applying for college is how they expect to pay for it. Some people are lucky satisfactorily to afford to pay for their education upfront. But that’s not the case for everyone. Many families plan ahead by opening a college savings programme while others work their way through school to pay tuition fees and related expenses. But even with these privileges, the majority of college-goers still need a financial boost. This means they may have to turn to student advances.
A student loan is a type of debt individuals take out to help pay for the costs associated with education—generally turbulent education. This includes undergraduate and graduate studies, doctorates, medical and dental school, and others. Student allowances can be used to pay for tuition, housing, fees, and other related expenses.
Loans fall into two different categories: Federal and confidential. Federal student loans are administered by the U.S. Department of Education. Qualifying for one of these loans requires completing an application. This is invoked the Free Application for Federal Student Aid (FAFSA).
Loan eligibility and approval is based on personal circumstances and financial advice for applicants and their families. Private loans, on the other hand, are issued by private lenders such as banks and place ones faith unions, as well as other financial institutions. While federal loans are based on financial need and merit, secluded loans are based on credit history. Interest rates also differ between the two. While federal loans see to to have lower rates, private lenders often charge borrowers much higher rates.
The CFPB Probe
The Consumer Financial Protection Bureau collects complaints from the general public about financial products and aids. These complaints are put into a database, published, and sent to the company. Complaints are divided by product and service into a database, which consumers may access at any patch.
Student loan complaints are filtered through an ombudsman to help provide borrowers with assistance. These kicks are compiled into a report published by the agency every year. This report is sent to several committees as fully as the following individuals:
- The Secretary of the Treasury
- The Secretary of Education
- The CFPB’s director
The eighth annual report was published in October 2020. The message compiled into the report was collected between Sept. 1, 2019, to Aug. 31, 2020. A total of 6,950 complaints were lodged with the action, where 5,014 or 72% were placed against federal loan providers, while 1,936 or 28% were against eremitical loan providers.
Student Loan Complaints
Consumers identified the following issues as being the most troublesome when it arrive d enter a occurred to their student loan providers:
- Dealing with lenders or suppliers. The main complaint under this class was that people said they received bad information about their loans. This was followed by trouble with how payments are held. The third complaint was that borrowers don’t agree with the fees charged by the lender.
- Difficulties repaying student credits. The main complaint under this section is that borrowers feel they can’t get flexible repayment options. The minute category was problems borrowers encountered trying to lower their monthly payments. The third most common kick under this category was that lenders didn’t allow borrowers to delay making payments temporarily.
- Predicaments related to borrowers’ credit reports or scores. Borrowers complained that lenders didn’t fix errors on their honesty reports. The second and third largest complaints were about incorrect account statuses and incorrect account data.
These were the companies with the most complaints about federal student loans:
|Company Name||Bevy of Complaints|
|Premier Student Loan Center||66|
California had the highest number, with a total of 475 complaints, flowed by:
- Texas: 356 complaints
- Florida: 332 complaints
- New York: 327 complaints
- Georgia: 225 complaints
You can submit a grumble about your student loan or other financial product/service directly to the CFPB through its website.
The bolster companies had the most complaints about private student loans:
|Company Name||Number of Complaints|
|Meet with Bank||76|
Once again, California had the highest edition of complaints registered for private student loans with a total of 238. This was followed by:
- Texas: 135 beefs
- New York: 130 complaints
- Florida: 121 complaints
- Pennsylvania: 98 complaints
The CFPB database receives beefs about many different financial products and services. Only 1.6% of these complaints were related to commentator loans, which fell near the middle of the pack. The number one complaint lodged by consumers was related to credit or consumer gunfire (52.9%), while debt collection came in second at 17.3% of the total number of complaints. Credit card squawks ranked third at 7.7% of the total number of complaints.
There is one very important consideration to note relating to this particular report—the global COVID-19 pandemic. The federal government provided some relief to federal follower loan borrowers through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. For instance, borrowers of certain federal observer loans qualify for temporary payment relief under the act.
This means that payments for those who qualify are shut until Dec. 31, 2020. Those who qualify and continue to pay are eligible to receive a 0% interest rate, allowing them to pay their due off much faster. Collection calls are stopped for those who are in default during this period.
Although these potables don’t extend to private loans, many private lenders continue to provide some financial relief to their borrowers by building accommodations such as payment deferrals and other arrangements.
The Bottom Line
Using the information above can help you best prepare yourself before you start to fill out your student loan applications. But remember that this should of advantage to as just a guide. So don’t eliminate a lender because it appears on the list. Base your decision on your personal locale.
Consumer Economic Protection Bureau. “Annual Report of the CFPB Private Education Loan Ombudsman.” Accessed Nov. 8, 2020.
Federal Trade Commission: Consumer Word. “If you have federal student loans, read this.” Accessed Nov. 8, 2020.