As federal student loan repayments resume after a three-year pause due to the COVID-19 pandemic, the Consumer Financial Protection Bureau (CFPB) published an Issue Spotlight on student borrowers’ experiences, using consumer complaints to identify emerging problems.
Key concerns include long hold times and abandoned calls. Borrowers often wait on hold for over an hour, and many give up without receiving assistance. Average call wait times have risen from 12 minutes in August 2023 to over 70 minutes in October 2023, resulting in about half of all calls being abandoned in October 2023, more than double August 2023’s rate of 17%.
There are also significant delays in processing income-driven repayment plan applications. As of late October, servicers reported over 1.25 million pending applications, with more than 450,000 pending for over 30 days. Processing times vary, with some servicers taking five times longer than others, putting borrowers at risk of making higher payments than they can afford.
Inaccurate and untimely billing statements are another issue. Errors include premature due dates before the end of the payment pause, inflated monthly payment amounts due to outdated poverty guidelines, and incorrect calculations for new income-driven repayment plans. These mistakes can cause confusion and further strain servicers’ resources as borrowers contact them to resolve these errors.
In the press release that accompanied the release of the Issue Spotlight, CFPB Director Rohit Chopra warned that “if student loan companies are cutting corners or sidestepping the law, it could pose serious risks to individuals and the economy.”
