CONSUMER FINANCIAL PROTECTION BUREAU | OCTOBER 2023
Report of the CFPB
Education Loan
Ombudsman
1 CONSUMER FINANCIAL PROTECTION BUREAU
Table of contents
Table of contents ..............................................................................................................1
Executive summary .......................................................................................................2
1 Federal student loans ...............................................................................................5
1.1 Background ................................................................................................ 5
1.2 Problems with access to customer service representatives...................... 8
1.3 Servicer errors............................................................................................ 9
1.4 Problems accessing cancellation and discharge ......................................15
2 Private student loans ..............................................................................................17
2.1 Background ...............................................................................................17
2.2 Problems accessing cancellation and discharge ......................................17
2.3 Direct lending by colleges.........................................................................21
3 Recommendations...................................................................................................24
4 Contact Information.................................................................................................26
Appendix A: Complaint Trends................................................................................27
Appendix B: Student Loan Trends ..........................................................................31
2 CONSUMER FINANCIAL PROTECTION BUREAU
Executive summary
This report analyzes the 9,284 student loan complaints submitted by consumers from
September 1, 2022, through August 31, 2023.
1
Complaints submitted to the CFPB suggest that
across the federal and private student loan markets, failures on the part of industry participants
are excluding some borrowers from protections and benefits intended for them under law.
Three out of four complaints received by CFPB about student loans during this period were
related to the servicing and collection of federal student loan debt. Borrowers submitted more
complaints on this topic compared to recent years.
2
The uptick coincides with ongoing systemic
changes to the federal student loan system,
3
borrowers anticipating the return to repayment of
federal student loans for the first time in over three years,
4
and increased financial precarity
among borrowers.
5
However, student loan servicers were simultaneously responsible for
transferring millions of accounts, implementing new policies to reduce monthly payments, and
addressing long-standing servicing failures including inadequate customer service and errors in
basic loan administration.
6
Complaints submitted by federal student loan borrowers reveal a number of key risks and
challenges, including:
7
1
Of these complaints, 75 percent were related to federal student loans and the remaining 25 percent were related to
private student loans. See Appe ndi x A for a more detailed analysis of 2022-2023 complaint trends.
2
See Appendix A for more detail about complaint trends.
3
See Section 1.1 for more information about changes to the student loan system that have occurred since March
2020.
4
U.S. Department of Education, Office of Federal Student Aid, Prepare for Student Loan Payments to Restart,
(accessed Oct. 15, 2023), https://studentaid.gov/manage-loans/repayment/prepare-payments-restart. This website
states that “Your first payment is due in October 2023.”
5
CFPB research shows that about one in five student loan borrowers have risk factors suggesting they may struggle as
scheduled payments resume. Thomas Conkling and Christa Gibbs, Office of Research blog: Update on student loan
borrowers as payment suspension set to expire, (Jun. 7, 2023), https://www.consumerfinance.gov/about-
us/blog/office-of-research-blog-upd a te -on-student-loan-borrowers-as-payment-suspension-set-to-expire/.
6
Consumer Financial Protection Bureau, Supervisory Highlights: Student Loan Servicing Special Edition, Issue 27
(Sep. 2022), https://files.consumerfinance.gov/f/documents/cfpb_student-loa
n-servicing-supervisory-highlights-
special-edition_report_2022-09.pdf; Consumer Financial Protection Bureau, Did you get a notice that your student
loans are transferring to a new servicer? Learn more about what this means for you (Sep. 3, 2021),
https://www.consumerfinance.gov/about-us/b
log/student-l oans-transferring-to-new-servi cer-le arn-what-this-
means-for-you/.
7
The CFPB recognizes that risks to borrowers may have continued to evolve now that the payment pause has ended.
3 CONSUMER FINANCIAL PROTECTION BUREAU
1. Customer service problems. Consumers reported long hold times, application
processing times, and incorrect information regarding payment amounts and due dates.
2. Errors related to basic loan administration. Complaints reveal a pattern of
servicer errors related to monthly payment amounts, payment histories, refunds, interest
accrual, and credit reporting.
3. Problems accessing loan cancellation. Borrowers reported that servicers
inaccurately processed applications or requests for loan cancellation programs for which
they were eligible, including closed school and borrower defense to repayment (BDR)
discharges, Public Service Loan Forgiveness (PSLF), and income-driven repayment
(IDR) related cancellations. Even where consumers ultimately received the appropriate
cancellation, processes were significantly delayed and borrowers frequently received
inaccurate information.
Roughly one in four complaints received by the CFPB during this period was related to private
student loan debt. For this group, complaints suggested key consumer risks, including:
4. Problems accessing loan cancellation. Private student loan borrowers reported
having trouble receiving accurate information about and applying for loan cancellation
through bankruptcy, death, or claims that the underlying educational provider engaged
in fraudulent or other illegal conduct.
8
5. Misleading origination tactics and coercive debt collection practices related
to private student loans, including institutional debts. Borrowers reported being
misled about the types of financial products their schools recommended for them and
also submitted complaints about experiencing debt collection practices such as transcript
withholding.
9
8
Where a school defrauds a borrower, the Holder Rule allows the borrower to bring a claim or defense on the basi s of
the school’s action, such as to challenge the validity of the loan under available law. See 16 C.F.R. Part 433.
The FTC
has explicitly stated that the Holder Rule applies to higher education fi nanci ng. See Federal Trade Commission, Staff
Guidelines on Trade Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses, 9 (May 4, 1976)
https://www.ftc.gov/system/files/documents/rules/holder-due-course-rule/760504hidcrule.pdf (
noting the rule
applies to transactions for “vocational training”).
9
Consumer Financial Protection Bureau, Supervisory Highlights: Student Loan Servicing Special Edition, Issue 27
(Sep. 2022), https://files.consumerfinance.gov/f/documents/cfpb_student-lo
an-servi cing-supervisory-highlights-
special-editi on_report_2022-09.pdf.
4 CONSUMER FINANCIAL PROTECTION BUREAU
This report discusses key consumer risks and makes recommendations to address them to
improve borrower outcomes.
10
While the body of the report primarily focuses on complaints
submitted to the CFPB this year, the appendices contain additional information on complaint
and market trends over time.
Many of the challenges highlighted in this report are not new. Complaints submitted to the
CFPB suggest that fundamental problems that have been documented in the student loan
program persist.
11
Robert G. Cameron
Education Loan Ombudsman
10
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”) established a Private Student Loan
Ombudsman (Ombudsman) within the Consumer Financial Protection Bureau (CFPB) and requires the Ombudsman
to prepare an annual report describing the activities and effectiveness of the Ombudsman during the preceding year.
See 12 U.S.C. § 5535. This report is drafted pursuant to the Act.
11
See, e.g., Consumer Financial Protection Bureau, CFPB Sues Nation’s Largest Student Loan Company Navient for
Failing Borrowers at Every Stage of Repayment, (Jan. 18, 2017), https://www
.consumerfinance.gov/about-
us/newsroom/cfpb-sues-nations-l argest-student-loan-company-navient-failing-borrowers-every-stage-rep ayment/.
See also, e.g., Consumer Financial Protection Bureau, Supervisory Highlights: Student Loan Servicing Special
Edition, Issue 27 (Sep. 2022), https://files.consumerfinance.gov/f/documents/cfpb_student-loa
n-servicing-
supervisory-highlights-special-edition_report_2022-09.pdf.
5 CONSUMER FINANCIAL PROTECTION BUREAU
1 Federal student loans
1.1 Background
The federal student loan portfolio grew to include over $1.643 trillion in outstanding loans
representing more than 92 percent of all student loans outstanding.
12
For the year ending
August 31, 2023, the CFPB handled almost 6,400 federal student loan complaints.
Overall, complaint volume related to federal student loans was higher than in recent years, and
the uptick coincides with ongoing systemic changes to the federal student loan system (Figure
1), borrowers anticipating the return to repayment of federal student loans for the first time in
over three years,
13
and increased financial precarity among student loan borrowers.
14
12
U.S. Department of Education, Office of Federal Student Aid, Federal Student Aid Portfolio Summary,
https://studentaid.gov/data-center/student/portfolio. S
ee Appendix B for more detailed information on student loan
trends.
13
U.S. Department of Education, Office of Federal Student Aid, Prepare for Student Loan Payments to Restart,
(accessed Oct. 15, 2023), https://studentaid.gov/manage-loans/repayment/prepare-payme nts-restart. This website
states that “Your first payment is due in October 2023.”
14
CFPB research shows that about one in five student loan borrowers have risk factors suggesting they may struggle
as scheduled payments resume. Thomas Conkling and Christa Gibbs, Office of Research blog: Update on student
loan borrowers as payment suspension set to expire, (Jun. 7, 2023), https://www.consumerfinance.gov/about-
us/blog/office-of-research-blog-upd a te -on-student-loan-borrowers-as-payment-suspension-set-to-expire/.
6 CONSUMER FINANCIAL PROTECTION BUREAU
FIGURE 1 TOTAL QUARTERLY STUDENT LOAN COMPLAINT VOLUME, 2018 – 2023
15
Since March 2020, the Department of Education has announced and implemented several
program changes. These include temporary “waivers” of certain program requirements for
Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR), increasing the
number of borrowers eligible for cancellation;
16
a new IDR plan (called Saving on Valuable
15
Analysis of complaints submitted to the CFPB about student loans. The Federal Student Aid Ombudsman at the
U.S. Department of Education (ED) also received over 100,000 complaints in FY 2022, but that group of complaints
is outside of the scope of this report. For a discussion of those complaints and associated trends, see, e.g., U.S.
Department of Education, Office of Federal Student Aid, FY 2022 Annual Report, (Jan. 23, 2023),
https://www2.ed.gov/about/reports/annual/2022report/fsa-report.pdf
, a
t 138-155.
16
U.S. Department of Education, Department of Education Announces Actions to Fix Longstanding Failures in the
Student Loan Programs, (April 19, 2022), https://www.ed.gov/news/press-r
eleases/department-education-
announces-actions-fix-l ongstand ing-failu res-student-loanprogramshttps://www.ed.gov/news/press-
releases/department-edu ca ti on-announces-actions-fix-longstanding-failures-stu de nt-loanprograms; U.S.
Department of Education, U.S. Department of Education Announces Transformational Changes to the Public
7 CONSUMER FINANCIAL PROTECTION BUREAU
Education, or SAVE) to lower monthly payments and interest accrual for many borrowers;
17
and
the “Fresh Start” program to temporarily waive some of the impacts of student loan default and
to provide borrowers with at least one defaulted federal loan with an easier path out of default.
18
In addition, certain servicers
19
exited the federal student loan program while ED ended its
contracts with private collection agencies (PCAs).
20
Servicers are responsible for accurately
implementing these changes, processing borrower payments and applications, and complying
with federal consumer financial laws.
Complaints reveal that borrowers are reaching out to servicers and encountering widespread
problems that prevent them from getting the information they need, enrolling in IDR plans, or
accessing loan cancellations.
21
Consumers reported experiencing long hold times, delays in
processing applications, and incorrect information regarding payment amounts and due dates.
Further, they reveal significant servicer errors including inaccurate payment histories and
delayed refunds that are owed to borrowers. The following sections discuss the consumer
complaints received by the CFPB during this period as they relate to those issues.
Service Loan Forgiveness Program, Will Put Over 550,000 Public Service Workers Closer to Loan Forgiveness,
(Oct. 6, 2021), https://www.ed.gov/news/press-r
eleases/us-department-education-announces-transformational-
changes-public-service-loan-forgiveness-program-will-put-over-550000-public-service-workers-closer-loan-
forgiveness; U.S. Department of Education, Office of Federal Student Aid, The Limited PSLF Waiver Opportunity
Ended on Oct. 31 2022, (accessed Oct. 5, 2023), https://studentaid.gov/announcements-events/pslf-limited-waiver.
17
88 Fed. Reg. 43820 (Jul. 10, 2023) (to be codified at 34 C.F.R. § 682, 685). 88 FR 43820. The final rule on the
SAVE Plan was published on July 10, 2023, and as such, represents a small portion of the period for this report.
18
U.S. Department of Education, Office of Federal Student Aid, A Fresh Start for Federal Student Loan Borrowers in
Default, (accessed Feb. 16, 2023), https://studentaid.gov/announcements-events/default-fre sh-start.
19
See, e.g., U.S. Department of Education, Office of Federal Student Aid, (LOANS-22-06) Public Service Loan
Forgiveness Program Transitioning from FedLoan Servicing to MOHELA (Updated Dec. 14, 2022), (Jun. 3, 2022),
https://fsapartners.ed.gov/k nowledge-c
enter/library/electronic-announcements/2022-06-03/public-service -loan-
forgiveness-p rogram-transi tioni ng-fedloan-servi cing-mohel a-updated-dec-14-2022.
20
Prior to the collections pause, administrative wage garnishments imposed on federally owned student loans were
administered by third-party private collection agencies (PCAs). However, on November 8, 2021, the Department of
Education announced that PCAs would no longer manage federal defaulted l oans.
Instead, management would b e
transferred to the Department of Education Default Resolution Group (DRG), indicating that the future default
recovery processes may differ in significant ways from the pre-2021 status quo. See U.S. Department of Education,
Office of Federal Student Aid, COVID-19 Relief: Loans in Default, (accessed Jan. 26, 2023),
https://studentaid.gov/announcements-events/covid-19/default
.
21
See Appendi x A for a more detailed analysis of the top issues raised in consumer complaints during this period.
8 CONSUMER FINANCIAL PROTECTION BUREAU
1.2 Problems with access to customer service
representatives
As federal student loan borrowers are now required to make payments for the first time in over
three years, it is important that borrowers are able to get help from customer service
representatives to answer questions, resolve account issues, and enroll in payment plans and
other programs. Complaints suggest that hold times for reaching customer service
representatives at federal student loan servicers are long enough that many borrowers simply
give up. These hold times impede borrowers’ ability to address questions and errors on their
accounts. In addition, some borrowers report that once they get through to customer service
representatives, they receive inaccurate information.
For instance, one borrower waited on the phone for more than two hours and explained that this
delay made it difficult for them to access their benefits:
I have repeatedly emailed and messaged [my servicer] for a month without any response.
Their hold times for a phone call are in excess of two hours. It is not possible
to communicate with my loan provider to request a refund and forbearance.
(Emphasis added)
While attempting to reduce their payments by enrolling in an IDR plan, another borrower
experienced lengthy hold times, disconnected calls, and problems logging into their online
account, suggesting that some borrowers may be encountering difficulty accessing self-help
tools in addition to live customer service:
I tried numerous times from June to September 6, 2023, to speak to a customer
representative so that I can reenroll in the IDR and to enroll in IDR-SAVE. I gave their
automatic questioning system my information; they transfer me to the customer
representative department, but I get no answer. After holding the phone for more
than an hour, it cuts off. This happened numerous times, I tried to log into my
account, an error message says that it cannot recognize my email, Therefore,
I cannot access nor reset my password to enter my account. Customer
Representatives do not answer me their student loan client to give me assistance and
information. (Emphasis added)
Another borrower reported in August 2023 that:
9 CONSUMER FINANCIAL PROTECTION BUREAU
I cannot get ahold of my loan servicer. I have tried a half dozen times. Either the phone line
is disconnected, the chat service doesn't work, or the wait is 960 minutes. I cannot adjust
my payments or do anything unless they talk with me.
Other times, borrowers report that they receive incorrect information from representatives. For
example, one borrower was told by their servicer that the servicer would not participate in
SAVE, even though servicers are obligated to place eligible borrowers into this plan:
I write in regard to inaccurate billing practices of [my servicer]. I was told that they will
not participate in SAVE on Federal Loans, have refused reimbursement of overpayments
made during Covid forbearance, and stated they will "restart" my max repayment timeline
from day 1.
These reported hold times, systems problems, and inaccuracies are meaningful impediments for
borrowers trying to access benefits that they are entitled to under the law. Although the
Department of Education has implemented an “on-ramp” program to help borrowers who miss
payments avoid default, these policies do not fully address the potential harms of customer
service issues. For instance, some borrowers may make payments that are larger than necessary,
miss out on making qualifying payments towards PSLF or IDR cancellation, or accrue interest
due to poor customer service.
1.3 Servicer errors
Borrowers submitted complaints about a host of servicer errors including incorrectly calculated
repayment amounts, lost or inaccurate payment histories, and lost refunds. These types of
errors can lead to borrowers paying more than they owe on their loans or missing out on key
benefits and protections to which they are entitled. Borrowers also report that challenges with
hold times and other customer service issues compound the problems created by servicing
errors, making them more difficult for them to resolve.
1.3.1 Problems in income-driven repayment plan enrollment
IDR plans can provide eligible borrowers with an opportunity to reduce their monthly payments
based on their income and family size, and borrowers enrolled in IDR can have their debt
cancelled after making a certain number of qualifying payments. Some borrowers who were
enrolled in a specific IDR plan (called the “REPAYE” plan) are being automatically converted to
enrollment in the new plan (called the “SAVE” plan). But complaints reveal that some
10 CONSUMER FINANCIAL PROTECTION BUREAU
borrowers, including those who have been automatically enrolled in the SAVE plan, have
received incorrect information and inflated payment amounts during that process.
For example, some borrowers reported that their payments incorrectly increased:
22
During the COVID loan repayment pause, my student loan servicer was automatically
switched from [servicer 1] to [servicer 2] because I applied for Public Student Loan
Forgiveness (PSLF). I was on an income driven repayment plan, REPAYE, prior to my
servicer being switched. My monthly payment under REPAYE prior to my servicer
switching from [servicer 1] to [servicer 2] was $199.22. Per the CARES act, I am not
required to recertify my income for my income driven repayment plan until at least 6
months after student loan repayments restart on 9/31/23, after the COVID pause. I have
therefore not submitted any information for income recertification. My monthly
payment amount should therefore be unchanged at $199.22 until I am
required to recertify my income. Despite this, my monthly payment amount is
listed at $3,210.99 on the main page of my … account.
I called [my servicer] on 8/1/23 and [was unable to get my payment amount changed, so I]
messaged [my servicer] on 8/1/23 with the same questions, and received a response on
8/4/23 that since I made a phone call that same day, they assumed the matter had been
resolved. I messaged back that same day on 8/4/23, and reiterated my same question, as it
had never been addressed. On 8/8/23, I received a response from [my servicer]
stating that based on the information I provided with my income driven
repayment application, my monthly payment amount calculated was
$3,210.99, and if I felt that was inaccurate I could call to recertify my income.
My income driven repayment application was processed in 2018 when I first applied, and I
have never reapplied or attempted to switch repayment plans since then. Again, I am
not required to recertify my income until at least 6 months after student loan
repayments are scheduled to resume after the covid pause. I have provided no
income recertification documentation from which this value has been
calculated. Furthermore, though it lists $3,210.99 as the monthly repayment amount on
the main account page … when I further click into IDR repayment plans under my account,
it actually lists my appropriate monthly payment of $199.22. (Emphases added)
22
During the payment pause, interest should not have accrued on federal student loans. Once payments resumed,
interest should have started to accrue on September 1, 2023, and the payment amounts should be accurate with the
first payment due date scheduled on or after October 1, 2023.
11 CONSUMER FINANCIAL PROTECTION BUREAU
Enrolling in IDR plans is a key protection that helps borrowers ensure that their payments are
affordable. Servicer errors that prevent borrowers from enrolling in IDR plans or provide
inaccurate information about basic loan details such as payment amounts can complicate the
repayment process and lead to unnecessarily high payments that put financial strain on
borrowers, missed payments, and a lack of trust in the student loan servicing program.
1.3.2 Incomplete and inaccurate payment histories
Several loan cancellation programs, including IDR and PSLF, require borrowers to make a
certain number of payments to qualify for cancellation. Borrowers submitted complaints that
their servicers’ records include incomplete or incorrect payment histories, which can make it
difficult and, in some cases, impossible for borrowers to access protections to which they are
legally entitled.
Loan transfers often cause inaccurate or incomplete payment histories.
23
When a loan is
transferred, transferring servicers send data about the loan and its complete payment history to
the receiving servicer. Often, these servicers operate on different loan management systems.
24
Errors occur when a borrower’s data are lost or corrupted as a result of poor data management
or incorrect data mapping—the process whereby the sending servicer and receiving servicer
agree on what specific data elements mean. These errors are compounded by subsequent
transfers making it nearly impossible for servicers or consumers to determine the full account
history. This results in incorrect billing statements, lost progress toward forgiveness, and
difficulty in correcting past billing errors.
25
23
Consumer Financial Protection Bureau, Supervisory Highlights: Student Loan Servicing Special Edition, Issue 27
(Sep. 2022), https://files.consumerfinance.gov/f/documents/cfpb_student-lo
an-servi cing-supervisory-highlights-
special-edition_re port_2022-09.pdf, at 11.
24
Consumer Financial Protection Bureau, Supervisory Highlights: Student Loan Servicing Special Edition, Issue 27
(Sep. 2022), https://files.consumerfinance.gov/f/documents/cfpb_student-lo
an-servi cing-supervisory-highlights-
special-edition_report_2022-09.pdf, at 5-6.
25
See, e.g., Consumer Financial Protection Bureau, Did you get a notice that your student loans are transferring to a
new servicer? Learn more about what this means for you (Sep. 3, 2021), http
s://www.consumerfinance.gov/about-
us/blog/student-loans-transferring-to-new-servicer-learn-what-this-me ans-for-you/. See also, e.g., Consumer
Financial Protection Bureau, Consumer Financial Protection Bureau Settles with Conduent Education Servi ces (May
1, 2019), https://www.consumerfinance.gov/abo
ut-us/newsroom/bureau-se ttl es-conduent-education-
services/#:~:text=Among%20other%20things%2C%20the%20consent,pay%20a%20%243.9%20million%20fine.
12 CONSUMER FINANCIAL PROTECTION BUREAU
These problems are particularly pervasive in the federal student loan portfolio where over 20
million loans have been transferred from one servicer to another since March 2020 (see Figure
2).
FIGURE 2 BORROWER ACCOUNTS BY SERVICER, 2016-2023
26
Complaints suggest that many borrowers struggle to track down basic documentation or make
corrections to their payment histories after their account is transferred. Furthermore, borrowers
report that resolving issues related to recently transferred loans can be difficult because they are
often bounced back and forth between the sending servicer and the receiving servicer.
For example, one borrower reported that they were unable to access a complete payment history
after their loan transferred from one servicer to another:
[Servicer 1] transferred their servicing of my student loans to [Servicer 2] in January of
2022. However, they did not transfer any of my payment history. I spoke with customer
service help at [Servicer 1] this week and they said the history transfer would be
forthcoming. Today I received a copy of my alleged payment history from [Servicer 1].
However, I graduated in 2015 and there is no payment history before 2018.
My loans were consolidated in 2016 and I have never defaulted on a payment.
It feels like they are lying about me and trashing my credit and work history
26
CFPB analysis of data provided by the U.S. Department of Education, Office of Federal Student Aid.
13 CONSUMER FINANCIAL PROTECTION BUREAU
in order to keep me from getting my loans forgiven in the future. (Emphasis
added)
Another borrower reported that when their loan was transferred, their repayment plan was
changed and they have been unable to resolve the issue despite reaching out to their servicer
repeatedly. This borrower reported that they were eligible for a payment of $0, but their servicer
told them that their payment was over $2,500 and was unable to get the error fixed even after
speaking with a customer service representative:
I enrolled in REPAYE income-driven repayment plan for my federal student loans on
6/8/2023. I recertified this repayment plan on December 13, 2022 as is required on an
annual basis. The Federal Government transitioned all borrowers enrolled in the REPAYE
plan to the SAVE plan, therefore, my loans are now enrolled in the SAVE repayment plan.
Per this plan, my monthly payments should be calculated based on my adjusted gross
income from the most recent tax year at the time of recertification. I recertified in 2022,
therefore, my monthly payments should be calculated based on my 2021
annual gross income of $5,170 and amount to $0/month.
My loan servicer … has erroneously calculated my monthly payment
beginning 8/31/2023 to be $2,521.80/mo. This is incorrect. I called … customer
service today, 8/22/2023, to inquire about the basis for the monthly payment. The
representative could not justify the monthly payment calculation nor did the
representative recalculate my monthly payment correctly. I was directed to re-enroll in
SAVE, however, I am already enrolled in this plan. (Emphases added)
As these complaints reveal, transfer-related errors are difficult and time consuming for
consumers to correct. In these situations, consumers challenges are compounded and prolonged
by long call hold times and poor customer service. When borrowers do not recognize these
errors or struggle to correct inaccurate account information, they may end up paying much more
than what they should under IDR plans or, even worse, paying on loans that should be canceled.
1.3.3 Delays and other problems processing refunds
Between March 2020 and September 2023, the Department of Education did not require
borrowers to make payments on loans it held.
27
Certain borrowers, such as those who elected to
make payments during this period, were entitled to a refund of those payments. However, some
27
U.S. Department of Education, Office of Federal Student Aid, COVID-19 Emergency Relief and Federal Student
Aid Webpage, (accessed Oct. 18, 2023), https://studentaid.gov/announcements-events/covid-19.
14 CONSUMER FINANCIAL PROTECTION BUREAU
borrowers who requested refunds report that they never received their refund checks or faced
unreasonably long delays.
For example, one consumer stated that:
On February 9th, 2023 I requested a student loan payment refund in the amount of
$1342.86 from [my servicer] under the Covid 19 payment pause. On February 13th, I
checked my account with [my servicer] and my balance had increased by the refund
amount. I previously filed a complaint with CFPB and received a response from [my
servicer] on May 26, 2023 regarding my refund. In the response, [my servicer] stated that
they would manually request the refund and I should see the refund sometime in June
2023. In July, I still had not received the refund and I reached out to [my servicer] about it.
I was told to wait another 30 days. It has now been 6 months and I still do not have
my refund, yet [my servicer] continues to show my balance as if the refund
was sent to me. (Emphasis added)
Another borrower reported that they requested a refund but never received it:
I requested a refund from my loan provider … around August of 2022 for the payments I
made during the pandemic (which totaled to about $9,000). I checked my account in
December 2022 and the balance on my loans was back to the original amount from before
the pandemic. I called [my servicer] around January of 2023 and was told that the refund
was still processing and would take a long time to receive the check. I called again in June
2023 and they told me I was misinformed before and that my check was actually issued in
October 2022. So they said they would reissue the refund check, but couldn't tell me how
long I'd be waiting before receiving anything. It has been almost a year since
requesting and I'm getting different stories from them. I'm not sure where my
money is or if they've actually issued the refund, but this has been extremely
frustrating and disappointing. (Emphasis added)
For many borrowers, these refunds are critical, and delays or failures to deliver refunds can have
substantial financial consequences for borrowers who may rely on these funds to pay down
other debt or afford other essential goods or services.
15 CONSUMER FINANCIAL PROTECTION BUREAU
1.4 Problems accessing cancellation and discharge
Borrowers with federal student loans reported difficulty accessing loan cancellation programs
for which they were eligible, including closed school discharge, PSLF, and IDR.
28
In some cases,
denials appear to have been the result of basic servicing errors and, in other cases, servicers
failed to inform borrowers about cancellation options for which they might be eligible. Indeed,
during the same period this report covers, CFPB examiners identified unfair and abusive acts or
practices related to servicers’ wrongful denials of IDR, PSLF, and Teacher Loan Forgiveness
applications.
29
For example, one borrower reported that they had not been able to access cancellation through
the PSLF program due to errors in their payment history, payment processing delays, payment
plan enrollment, and consolidation issues:
… I was a public school teacher for 26 years. I am eligible for the PSLF. I had
been denied PSLF in 2017 … and was not provided with any detail about why I was not
eligible or what I could do to meet the PSLF guidelines. During the summer of 2022 … [we]
faxed my PSLF form and the loan consolidation form … I waited from October 2022 to
March 2023, for my forms to be processed. I was told I needed to wait 30, then 60, then 90
days … I have now been advised that I am waiting for prior payment counts from my prior
[my servicer] to be updated in the National Student Loan Data system. I have been
informed that this is done manually and may take until 2024. The false promises of 30, 60
or 90 day processing for the PSLF is not relevant if my prior payment counts cannot be
calculated until 2024 … My PSLF form was submitted in October 2022 and it is July 2023
and I am now waiting for manual counts of payments to be made to prove my PSLF
eligibility. I made on-time payments monthly since 2007, and have far exceeded
the 10 year PSLF requirement … (Emphasis added)
Another borrower, reported that their application for PSLF based on periods of service with the
U.S. Army was not processed in a timely manner, despite multiple attempts at submitting the
paperwork:
28
U.S. Department of Education, Office of Federal Student Aid, Student Loan Forgiveness Webpage, (accessed Oct.
15, 2023), https://studentaid.gov/manage-loans/forgiveness-cancellation.
29
Consumer Financial Protection Bureau, Supervisory Highlights: Student Loan Servicing Special Edition, Issue 27,
(Sep. 2022), https://files.consumerfinance.gov/f/documents/cfpb_student-lo
an-servi cing-supervisory-highlights-
special-edition_report_2022-09.pdf.
16 CONSUMER FINANCIAL PROTECTION BUREAU
I am having difficulty getting my PSLF payment count updated with [my servicer]. I
currently have 12 student loans with [my servicer]. They were transferred from [my prior
servicer] in August of 2022. When they were transferred, [my servicer] told me in a on
their website not to resubmit any PSLF documents since they would receive them from [my
prior servicer] and process them accordingly. [My prior servicer] had already processed
them.
After waiting months for the documents to be processed, I called [my servicer] and I was
informed that while they did in fact have the documents, it would be beneficial for me to
resubmit them … I resubmitted the documents with additional employment information in
December of 2022 …
It has been 8 months since [my servicer] has received the documents to
process my PSLF application. It should not take this long to process PSLF and I don't
appreciate not being informed that my documents have been cancelled. I am being told
that it can take a long time, and while I understand that and am being patient, it is almost
time for me to recertify and resubmit documents for the next year … (Emphasis added)
Overall, complaints indicate that errors and incorrect information provided by servicers can
prevent borrowers from accessing loan cancellation programs and other discharge opportunities
that they are eligible for. The Department of Education has made several policy changes aimed
at increasing borrowers’ ability to use loan cancellation programs, and complaints suggest that
student loan servicers’ actions are hindering or delaying those efforts.
17 CONSUMER FINANCIAL PROTECTION BUREAU
2 Private student loans
2.1 Background
The private student loan portfolio includes $132 billion in outstanding debt, representing
roughly eight percent of the total outstanding student debt.
30
Typically, private student loans
offer fewer flexibilities and more limited discharge opportunities than federal student loans.
31
During this period, one in four complaints to the CFPB about student loan issues were related to
private student loan debt, which is disproportionate to the amount of debt they represent.
32
Complaints suggest that industry participants’ failures are precluding borrowers from accessing
protections and benefits.
2.2 Problems accessing cancellation and discharge
2.2.1 Cancellation due to school misconduct
Over the past decade, administrative and judicial findings established that certain schools
illegally defrauded their students, including by failing to provide the education or job prospects
that they tell students they will provide.
33
Students who took out loans to attend such schools
are frequently eligible for cancellation. For instance, federal student loan borrowers who have
been defrauded by their schools can apply to discharge federal loans through a program called
borrower defense to repayment (BDR).
34
Since 2021, the Department of Education has
discharged over $22 billion in federal student loans for over 1.3 million borrowers who were
30
See Appendix B for more detailed information on the total outstanding student loan volume.
31
For a more detailed discussion, see, e.g., Consumer Financial Protection Bureau, Private Student Loans, (Aug. 19,
2012), https://files.consumerfinance.gov/f/documents/cfpb_education-loan-ombudsman_report_2022-10.pdf.
32
See Appendix A for more detailed information about complaint trends during this period.
32
See Appendix A for more detailed information about complaint trends during this period.
33
See, e.g., U.S. Department of Education, Office of Federal Student Aid, Apply for Borrower Defense Loan
Discharge Webpage, (accessed Oct. 15, 2023), https://studentaid.gov/borrower-defense/.
34
See 34 C.F.R. §§ 685.206, 685.222.
18 CONSUMER FINANCIAL PROTECTION BUREAU
cheated by their schools, saw their institutions precipitously close, or are covered by related
court settlements.
35
While private student loan borrowers cannot access the BDR program, they do have certain
rights to challenge the repayment of loans that were based on fraudulent representations. The
FTC’s Holder-in-Due-Course Rule (Holder Rule) requires all covered transactions, including
education financing, to include mandated language acknowledging that if the seller fails to
satisfy its obligations, the borrower can refuse to repay the loan, regardless of who holds the
contract.
36
Many private student loans thus include a contractual guarantee in the promissory
note that the borrower can assert against any subsequent loan holder any claim they have
against their school. If borrowers have federal loans discharged under BDR, it will often involve
underlying facts and circumstances that demonstrate fraudulent conduct that could be the basis
for a claim under the Holder Rule.
Private student loan borrowers submitted complaints to the CFPB that their lenders have
refused to discharge their private student loans or even so much as consider their claims, even
after the federal loans they took out for the same education have been discharged under the
Department of Education’s BDR process.
37
Complaints also continue to indicate that holders of
private student loan contracts are not engaging with borrowers’ claims of deception and abuse at
schools, even where other law enforcement actors reached conclusive findings on their claims.
For example, one borrower reported that, even after their federal student loans were cancelled
due to misconduct by their institution, they still owed their private student loans:
I have a private student loan with [loan holder] … The school is closed … There was a
lawsuit against the school and we the students won. My federal student loans were
35
U.S. Department of Education, Biden-Harris Administration Announces an Additional $9 Billion in Student Debt
Relief, (Oct. 4, 2023), https://www.ed.gov/news/press-r
eleases/b iden-harri s-administration-announces-addi tional-
9-billion-student-debt-
relief#:~:text=The%20Biden%2DHarris%20administration%20announced,automatic%20relief%20for%20borrower
s%20with.
36
16 C.F.R. Part 433. A borrower’s successful challenge to the validity of a loan under the Holder Rule would result in
the discharge or cancellation of the debt by the current loan holder and appropriate corrections to credit reporting.
The FTC has explicitly stated that the Holder Rule applies to higher education financing. See Federal Trade
Commission, Staff Guidelines on Trade Regulation Rule Concerning Preservation of Consumers’ Claims and
Defenses, 9 (May 4, 1976),
https://www.ftc.gov/system/files/documents/rules/holder-du
e-course-
rule/760504hidcrule.pdf (noting the rule applies to transactions for “vocational training”).
37
This issue was also identified and discussed at length in the 2022 Report of the Education Loan Ombudsman. See
Consumer Financial Protection Bureau, Report of the CFPB Education Loan Ombudsman, (Oct. 2022),
https://files.consumerfinance.gov/f/documents/cfpb_education-l oan-ombudsman_report_2022-10.pdf, at 34-5
3.
19 CONSUMER FINANCIAL PROTECTION BUREAU
removed completely … I do Not have a transcript, a degree, anything from the school due
to the fraudulent activities they did. [Loan holder] is not looking into this matter
and is ignoring my concerns and responses … Please help! (Emphasis added)
The private student loan company responded, but in the process provided misleading
information about the borrower’s ability to make these claims:
… T
o further explain, in reference to your private loans, there’s no discharge program
available at this time for students who claim a defense to repay a private loan due to
misinformation or the quality of education they received at their school. We’re not able to
respond to any information or guidance provided by a customer’s school, financial aid
advisor, or other financial advisor. You are welcome to review your Loan
Agreement for any additional legal remedies that may be available to you.
(Emphasis added)
Similarly, a second borrower reported that they had been unable to access relief using the
Holder Rule provision in their private student loan promissory note:
I attended [for-profit school] from 2005 to 2008 and I was successful in discharging my
federal student loans through the Borrower Defense to Repayment program … [W]hich
was established to provide student debt relief to students who were misled, defrauded, or
otherwise harmed by predatory colleges and universities – often, for-profit schools … But
the program only covers federal student loans. Private student loans are not eligible for
Borrower Defense relief, and [loan holder] refused to discharge my private loans. I
believe I am entitled to cancellation of my private student loans under the
“Holder Rule” theory. This rule requires that loans disbursed by commercial entity
through a lender’s or creditor’s relationship with that entity include a provision in the loan
promissory note that allows a borrower to raise the same claims and defenses against the
lender that they could raise against the commercial entity. (Emphasis added)
In the case that a school commits fraud, it is often the borrower’s contractual right to assert a
claim against the loan holder and seek a discharge of that loan. Complaints, however, have
indicated that various private loan servicers provide misleading information about borrowers’
rights, either dissuading the borrower from pursuing these claims or functionally limiting their
ability to do so. These complaints raise questions about whether private student loan servicers
are operating in compliance with loan promissory notes, and they suggest that borrowers who
have the right to exercise defense to collection efforts are being forced to continue to pay on
their loans.
20 CONSUMER FINANCIAL PROTECTION BUREAU
2.2.2 Bankruptcy
On March 13, 2023, the CFPB issued a bulletin to address improper collection attempts by
servicers of certain student loans after they had been discharged in bankruptcy.
38
As the bulletin
explains, after a debtor files for bankruptcy, a judge issues a discharge order that releases a
debtor from personal liability for all debts unless they are exempted. Some types of student
loans—including federal student loans and private student loans that meet the definition of a
“qualified education loan”—are not discharged by these general court orders.
39
But some private
student loans that do not meet the definition of a “qualified education loan,” such as loans made
to attend schools or programs whose borrowers may not access Title IV aid and loans made in
excess of the cost of attendance, are covered by the general discharge order.
Accordingly, the bulletin details CFPB examiners’ determination that student loan servicers
engaged in an unfair act or practice, in violation of the Dodd-Frank Act, when they resumed
collection of debts that were discharged by bankruptcy courts. Since publishing the bulletin, the
CFPB has worked to ensure that companies maintain policies and procedures to determine
whether loans are dischargeable in bankruptcy and whether, in the absence of such policies,
companies have made collection attempts on loans that were discharged via bankruptcy court.
Complaints continue to reflect that servicers are providing inaccurate information to borrowers
about loan eligibility for bankruptcy discharge. For example, a borrower was provided incorrect
information and told that neither federal nor private student loans are dischargeable unless
undue hardship can be proven.
I filed bankruptcy in December 2021, which was discharged in February 2022. This
included my [private education loan]. The loan was removed from my credit report but
then was put back on and into repayment in April of 2022. They are still trying to
collect on this loan, even though it was discharged. I have tried to talk to [my
servicer] but they keep telling me that it's not eligible for discharge with no explanation as
to why not. (Emphasis added)
38
Consumer Financial Protection Bureau, Bulletin 2023-01: Unfair Billing and Collection Practices After
Bankruptcy Discharges of Certain Student Loan Debts, (Mar. 16, 2023),
https://files.consumerfinance.gov/f/documents/cfpb_unfair-b
illing-collection-bankru ptcy-student-loan-debt_2023-
01.pdf. See also, e.g., Robert Cameron, Busting myths about bankruptcy and private student loans (Apr. 12, 2022),
https://www.consumerfinance.gov/about-us/blog/busting-myths-about-b ankrup tcy-and-private-stu de nt-loans/.
39
The Bankruptcy Code requires borrowers wi th the se obligations to demonstrate that the debt would impose an
undue hardship throu gh an adversarial proceeding.
21 CONSUMER FINANCIAL PROTECTION BUREAU
The company responded by incorrectly stating that no education-related loans are dischargeable
unless there is a showing of undue hardship and an adversary proceeding:
It is important to understand that neither federal nor private loans are
dischargeable under current bankruptcy laws unless undue hardship can be
proven. As of this date, we have no record that your student loans were discharged by
means of an adversary proceeding. Therefore, you are still obligated to repay this loan.
(Emphasis added)
Servicers cannot ignore bankruptcy orders and should develop policies and procedures to
ensure that they are not illegally collecting on loans discharged in bankruptcy.
2.3 Direct lending by colleges
Some private education loans are offered by institutions of higher education, including both for-
profit schools and non-profit schools. These loans are typically not affiliated with federal student
loan programs administered by the U.S. Department of Education. The CFPB is concerned about
the borrower experience with institutional loans because of past abuses at schools where
students were subjected to high interest rates and strong-arm debt collection practices. Schools
have not historically been subject to the same servicing and origination oversight as traditional
lenders.
The CFPB has taken enforcement actions on predatory lending related to colleges
40
and
conducted examinations of colleges’ in-house lending programs.
41
In September 2022, the CFPB
reported examiners’ findings that certain institutions maintained a blanket policy of withholding
transcripts in connection with the extension of credit.
42
Such withholding constitutes an abusive
40
See, e.g., Consumer Financial Protection Bureau, CFPB Sues For-Profit College Chain ITT For Predatory Lending,
(Feb. 26, 2014), https://www.consumerfinance.gov/about-u
s/newsroom/cfpb-sues-for-profi t-col le ge-chai n-itt-for-
predatory-lending/. See also, e.g., Consumer Financial Protection Bureau, CFPB Wins Default Judgment Against
Corinthian Colleges for Engaging in a Predatory Lending Scheme, (Oct. 28, 2015),
https://www.consumerfinance.gov/about-us
/newsroom/cfpb-wins-default-ju dgme nt-agai nst-corinthi an-col leges-
for-engaging-in-a-predatory-lending-scheme/
41
See, e.g., Consumer Financial Protection Bureau, Consumer Financial Protection Bureau to Examine Colleges’ In-
House Lending Practices, (Jan. 20, 2022), https://www.consumerfinance.gov/about-u
s/newsroom/consumer-
financial-protection-bureau-to-examine-colleges-in-house-lending-practices/.
42
Consumer Financial Protection Bureau, Supervisory Highlights: Student Loan Servicing Special Edition, Issue 27,
(Sep. 2022), https://files.consumerfinance.gov/f/documents/cfpb_student-lo
an-servi cing-su pe rvisory-highlights-
special-edition_report_2022-09.pdf.
22 CONSUMER FINANCIAL PROTECTION BUREAU
act under the Consumer Financial Protection Act in certain cases.
43
In September 2023, the
CFPB released a report highlighting consumer risks related to tuition payment plans offered by
colleges, which are often marketed as low-risk, no-cost alternatives to student loans but often
feature high costs for late payment, coercive debt collection tactics including transcript
withholding, and more.
44
Consumer complaints reveal that some students were misled about financial products offered by
their schools. For instance, one borrower reported that they were misled about the income-share
agreement (ISA) that their school offered in partnership with a third-party lender. The borrower
submitted a complaint stating that they did not receive required disclosures and that they were
told the ISA would not affect their credit when in fact it did.
I am writing to file a complaint against [my servicer], [school], and [lender] for
attempting to collect money from me on an illegal contract, an Income Share Agreement …
[T]he ISAs they employed are considered private education loans under 12
C.F.R. 1026.46(b)(5). The ISAs … did not include the required disclosures
outlined in 12 C.F.R. 1026.46(b)(5) … [The school] misrepresented the nature
of these ISAs in their marketing and business practices, and was not a
properly licensed lender when the loan contract was signed … [The school]
provided a private education loan that did not conform to federal consumer financial laws.
… I was misled by their representations that the ISA was not a loan and would not affect
my credit. The contract for this loan states in bold print that, “THIS IS NOT A LOAN OR
CREDIT” and “THIS INCOME SHARE AGREEMENT IS NOT A LOAN OR CREDIT. THIS
AGREEMENT IS NOT AN ASSIGNMENT OF WAGES” … Despite the contract stating
that it was not a loan or credit product, my credit report shows an account
from [my servicer] categorized as either “student loan” or “education loan …”
(Emphasis added)
Other borrowers wrote to the CFPB about debt collection experiences related to debts they owe
to their schools. One borrower reported that transcript withholding prevented them from
getting the additional training they needed:
43
Consumer Financial Protection Bureau, Supervisory Highlights: Student Loan Servicing Special Edition, Issue 27,
(Sep. 2022), https://files.consumerfinance.gov/f/documents/cfpb_student-lo
an-servi cing-supervisory-highlights-
special-editi on_report_2022-09.pdf, at 8-9; 12 U.S.C. § 5331.
44
Consumer Financial Protection Bureau, Tuition Payment Plans in Higher Education, (Sep. 14, 2023),
https://www.consumerfinance.gov/data-re search/rese arch-reports/tuition-payment-p lans-in-higher-education/.
23 CONSUMER FINANCIAL PROTECTION BUREAU
I owe University of [State] a balance of $2500.00 dollars … I have been notified that I am
going to lose my job in the near future … I have tried to enroll in other schools to become
trained in another skill before I lose my job. I called the University of [State] to obtain my
transcripts and they are withholding them from me. The other schools will not accept
unofficial copies of transcripts. I have tried to set up a payment plan with
[University of State] and ask that they go ahead and release my transcripts
and they are refusing to do that as well. I am stuck in a terrible situation. I am
getting ready to be unemployed and am unable to further my skills … I do not deny owing
the debt and fully intend to repay … I tried to complete an official withdraw with
[University of State] too avoid incurring the debt and was told it was too late to do so. I
tried to avoid this situation, my 21 year old brother was very sick with cancer at that time
and I could not focus on my studies … (Emphasis added)
Another borrower reported that a balance they owed to their college simply had no promissory
note and appeared to be governed by a separate enrollment agreement:
I am writing to file against the school [College] … [and Servicer]. This school has had
numerous court cases for deceptive practices and fraudulent actions. I submitted a
borrower defense application to the Department of Education in March 2018 and recently
it was approved with 100% student loans forgiven … However, I am writing about the
institutional … in-house financing loans associated with [college] … There is no
corresponding promissory note as this balance was interest free accounts
receivable. This balance would have been covered under an enrollment
agreement … (Emphasis added)
Consumer complaints reveal that borrowers are sometimes misled by information that schools
or third-party service providers give them about financial products. Borrowers express
confusion and experience harm when there is a mismatch between their repayment expectations
and the terms stated in their original loan documents. When colleges extend credit, it is they
must provide adequate disclosures and follow federal consumer protection laws.
24 CONSUMER FINANCIAL PROTECTION BUREAU
3 Recommendations
Overall, complaints submitted to the CFPB suggest that there are fundamental problems related
to student loan servicing that jeopardize borrowers’ ability to make payments, achieve loan
cancellation, or receive other protections they are entitled to under federal law.
Recommendations for policymakers, law enforcement, and industry participants include:
Ensuring that federal student loan borrowers can access all protections intended
for them under the law:
Federal student loan servicers should correct processes and eliminate long hold times,
processing delays, and basic errors. Furthermore, servicers should ensure that all federal
student loan borrowers can access loan cancellation options for which they are eligible
and that these programs are implemented consistent with the law and Department of
Education policy.
Policymakers, regulators, and law enforcement officials should remain vigilant to
consumer complaints about servicing failures that create barriers to federal benefits and
protections. Misinformation, delays, and errors in processing deprive consumers of the
benefits and protections afforded to them under law. Detecting servicer failures is critical
to effectively holding industry participants accountable for violations of the law or
contractual obligations.
Ensuring that loan holders and servicers of private student loans do not collect
debt where it may no longer be legally owed or where the debt was previously
discharged:
Regulators and law enforcement should examine whether holders and servicers of
private student loans have policies and procedures to accurately disclose and manage the
contractual protections required by the Holder Rule.
45
After a decade of private and
government actions compiling evidence that predatory schools coerced students to take
on debt through fraudulent means, holders and servicers must honor these defenses to
collection.
45
See also Consumer Financial Protection Bureau, Report of the CFPB Education Loan Ombudsman, (Oct. 2022),
https://files.consumerfinance.gov/f/documents/cfpb_education-l oan-ombudsman_report_2022-10.pdf, at 54.
25 CONSUMER FINANCIAL PROTECTION BUREAU
Companies should ensure that they are not illegally collecting on loans discharged in
bankruptcy.
Companies should also proactively provide accurate and actionable information about
whether borrowers’ student loans are eligible for discharge in bankruptcy without an
adversarial proceeding.
Having access to the terms and conditions of a loan is a basic protection for both current
and prospective borrowers. Loan holders and servicers should post promissory notes
online so that prospective and current borrowers can understand the terms and
conditions of their credit.
Using consumer complaints to develop policies and procedures when they reveal
systematic problems:
The CFPB continues to receive complaints about the same issues, suggesting that loan
holders and servicers are responding to individual complaints but failing to make
systemic changes that address broadly applicable problems. Industry participants should
use consumer complaints to identify and address systemic consumer protection issues
within their organizations and remediate all similarly situated consumers.
26 CONSUMER FINANCIAL PROTECTION BUREAU
4 Contact Information
To reach the CFPB’s Education Loan Ombudsman:
By phone (844) 611-4260
By email Education_Loan_Ombudsman@cfpb.gov
By mail Consumer Financial Protection Bureau
Attn: Education Loan Ombudsman
1700 G Street NW
Washington, DC 20552
To submit a complaint:
Online c
onsumerfinance.gov/complaint
By phone 180+ languages, M-F 8am-8pm EST
Toll-Free: (855) 411-CFPB (2372)
TTY/TDD: (855) 729-CFPB (2372)
By mail Consumer Financial Protection Bureau
PO Box 2900
Clinton, Iowa 52733
By fax (855) 237-2392
Press and media requests:
By email press@consumerfinance.gov
Congressional inquiries:
By phone (202) 435-7960
27 CONSUMER FINANCIAL PROTECTION BUREAU
APPENDIX A: COMPLAINT TRENDS
Monitoring consumer complaints is one of the CFPB’s primary functions. Complaints provide
insights into problems consumers experience and can serve as an early indicator of issues in the
financial marketplace. Complaint analyses support the CFPB’s work to supervise companies,
enforce federal consumer financial laws, propose rules, and develop tools to empower
consumers to make informed financial decisions.
The CFPB analyzes complaints in several ways to identify trends and possible consumer harm.
For example, the CFPB monitors complaint volume across multiple categories, such as product,
issue, sub-product, sub-issue, company, and company response, among others. The CFPB
analyzes complaint volume across time and by geographic area, as well as by self-identified
characteristics, such as servicemember status and age.
While complaint volume and context are important, some of the most valuable information is
found in the narrative text that both consumers and companies provide during the complaint
process. The CFPB analyzes the narrative text consumers provide in their complaints, frequently
augmenting traditional qualitative analysis with automated methods. Similarly, the Bureau
analyzes the text companies provide in their responses to consumers and in the documents
provided to support their responses. Analyzing text from consumers and companies provides a
more complete understanding of issues and a clearer idea of how companies respond to those
issues.
During the period of September 1, 2022 through August 31, 2023 of the 9,284 student loan
complaints received, 6,934 were related to federal student loans and 2,350 were related to
private student loans (Figure 3). The number of overall complaints has increased compared to
the previous year. The number and share of complaints about federal student loans has
increased compared to the previous year, while the number and share of complaints about
private student loans has decreased.
28 CONSUMER FINANCIAL PROTECTION BUREAU
FIGURE 3 COMPLAINT VOLUME, SEPTEMBER 2022 – AUGUST 2023
The distribution of complaints on federal student loans during the current period differed
compared to the previous year (Figure 4). More complaints were received at the beginning
(September and October 2022) and end (July and August 2023) of the current reporting period.
During the prior reporting period, more complaints were received during the middle (December
2022 to February 2023). Year-over-year, total student loan-related complaints increased just
over 10 percent, federal student loan-related complaints increased just over 27 percent, and
private student loan-related complaints decreased around 21 percent.
FIGURE 4 YEAR-OVER-YEAR COMPARISON OF COMPLAINT VOLUME, BY MONTH AND LOAN TYPE
29 CONSUMER FINANCIAL PROTECTION BUREAU
Student loan borrower complaints most frequently involve dealing with a lender or servicer and,
more specifically, receiving bad information about a loan and having problems with how
payments are handled. MOHELA was the top subject of federal student loan complaints
received by the CFPB during this period, followed by EdFinancial, Nelnet, Maximus, and
PHEAA (Figure 5).
FIGURE 5 ORGANIZATIONS WITH THE MOST FEDERAL STUDENT LOAN COMPLAINTS, SEPTEMBER
2022 – AUGUST 2023
Almost nine in ten complaints about federal student loans involved problems consumers had
while dealing with their servicer (Figure 6).
FIGURE 6 CONSUMER-IDENTIFIED ISSUES IN FEDERAL STUDENT LOAN COMPLAINTS BY
ORGANIZATION, SEPTEMBER 2022 – AUGUST 2023
30 CONSUMER FINANCIAL PROTECTION BUREAU
Navient was the top subject of private student loan complaints received by the CFPB during this
period, followed by the SLM Corporation (also known as Sallie Mae), Nelnet, PHEAA, and
Discover (Figure 7).
46
FIGURE 7 TOP RECIPIENTS OF STUDENT LOAN COMPLAINTS, SEPTEMBER 2022 - AUGUST 2023
Consumer complaints most frequently concerned dealing with a lender or servicer (Figure 8).
FIGURE 8 CONSUMER-IDENTIFIED ISSUES IN PRIVATE STUDENT LOAN COMPLAINTS BY
ORGANIZATION, SEPTEMBER 2022 – AUGUST 2023
46
The figures below are based on complaints sent to companies or organizations and data exported from the public
Consumer Comp l aint Database (CCDB) as of Sep. 1, 2023.
31 CONSUMER FINANCIAL PROTECTION BUREAU
APPENDIX B: STUDENT LOAN TRENDS
The Department of Education is the dominant player in the student loan industry (Figure 10).
Borrowers collectively owe $1,766 billion in outstanding student loans, of which $132 billion are
owed to private education lenders (issued by banks, credit unions, state-sponsored agencies, and
other non-bank lenders).
47
FIGURE 9 TOTAL OUTSTANDING STUDENT LOAN VOLUME, JUNE 2023
48
47
The total private stu de nt l oan volume is derived b y subtracting the total portfolio amount reported by the Office of
Federal Student Aid from the total amount of education debt reported by the Federal Reserve Board’s G19 dataset.
U.S. Department of Education, Office of Federal Student Aid, Federal Student Aid Portfolio Summary,
https://studentaid.gov/data-center/student/portfolio
; F
ederal Reserve, G19 Consumer Credit Series (Oct. 6, 2023),
https://www.federal reserve.gov/releases/g19/current/. Chart updated Sep. 7, 2023.
48
U.S. Department of Education, Office of Federal Student Aid, Federal Student Aid Portfolio Summary,
https://studentaid.gov/data-center/student/portfolio; F
ederal Reserve, G19 Consumer Credit Series (Oct. 6, 2023),
https://www.federal reserve.gov/releases/g19/current/. Chart updated Sep. 7, 2023.
32 CONSUMER FINANCIAL PROTECTION BUREAU
The chart below reveals the growth in student loan debt over time (Figure 11). Since 2009, the
share of household debt attributed to student loans has grown substantially, from 22 percent to
37 percent, making it the largest single source of household debt (excluding primary mortgage
balances).
FIGURE 10 NON-MORTGAGE DEBT BALANCES (JUNE 2008- JUNE 2023)
49
49
Federal Reserve Bank of New York, Consumer Credit Panel/Equifax: Total Debt Balance and its Composition
(Aug. 8, 2023), https://www.newyorkfed.org/microeconomics/databank.html. Chart updated S
ep. 7, 2023.
33 CONSUMER FINANCIAL PROTECTION BUREAU
Due to the federal student loan payment pause, delinquent balances were at a historically low
level as of June 2023 (Figure 12).
FIGURE 11 DELINQUENT BALANCES AS A SHARE OF TOTAL OUTSTANDING LOAN BALANCES, 2009 -
2023
34 CONSUMER FINANCIAL PROTECTION BUREAU
As of March 2023, borrowers owed over $1.6 trillion in federal student loan debt (Figure 13).
FIGURE 12 TOTAL FEDERAL STUDENT LOANS OUTSTANDING BY TYPE
50
50
U.S. Department of Education, Office of Federal Student Aid, Federal Student Aid Portfolio Summary,
https://studentaid.gov/data-center/student/portfolio. Chart u
pdated Sep. 7, 2023.
35 CONSUMER FINANCIAL PROTECTION BUREAU
The average federal student loan burden was $37,645 at the end of the June 2023 and has
grown relatively steadily since 2012 (Figure 14).
FIGURE 13 AVERAGE OUTSTANDING FEDERAL STUDENT LOAN BALANCE PER BORROWER
51
51
U.S. Department of Education, Office of Federal Student Aid, Federal Student Aid Portfolio Summary,
https://studentaid.gov/data-center/student/portfolio. C
hart updated Sep. 7, 2023.
36 CONSUMER FINANCIAL PROTECTION BUREAU
Tighter underwriting of private loans following the Great Recession, the introduction of the
federal graduate PLUS program in 2006, and post-origination flexibilities (e.g., IDR and
discharge opportunities) provided to federal borrowers have eroded the demand for private
loans in recent years (Figure 15). Sallie Mae is top issuer of in-school private student loans. Top
refinance lenders include SoFi and Earnest, a division of Navient.
FIGURE 14 NON-FEDERAL STUDENT LOAN ORIGINATIONS BY LOAN TYPE
52
Note: The College Board stopped disaggregating non-federal origination volume by type of issuer,
ef f ective with the 2016-17 academic year.
52
CollegeBoard, Trends in Student Aid 2016, https://research.collegeboard.org/media/pdf/trends-stu de nt-aid-2016-
full-report.pdf, at p. 9, Table 2, “Total Student Aid”; Coll ege Board, Trends in College Pricing and Student Aid 2022,
https://research.collegeboard.org/media/pdf/trends-in-college-pricing-student-aid-2022.pdf, at p. 31, Figure SA-1,
“Total Student Aid”; Enterval Analytics, Private Student Loan Report (Jun. 27, 2023),
https://www.enterval.com/media/files/enterva
l/psl /enterval-private-stu de nt-loan-report-2023-
q1.pdf?v=20230627T195956. Charts updated Sep. 7, 2023.
