| 摘要 | Key Points
The Department of Education hires private contractors to service its student loans, while policymakers set the terms for borrowers.
The Consumer Financial Protection Bureau’s complaint database automatically counts any complaint about the loan program as a complaint against these servicers.
Loan program terms are often mistaken for servicer errors: 44 percent of these complaints reference an issue under servicers’ control, while 34 percent reference program terms.
Policymakers can address many of these complaints with a more straightforward student loan program.
Executive Summary
Nearly all student debt is issued through the federal government’s student loan program, but the government does not actually service the loans itself. Instead, it hires private contractors to handle most interactions with borrowers. Recent media coverage, court cases, and legislative proposals suggest that loan servicers are mistreating borrowers by failing to provide them with sufficient and accurate information, committing processing errors, and providing low-quality customer service.
This report examines the extent to which these issues can be traced to how policymakers designed the federal loan program itself, not in how loans are serviced. By analyzing a random sample of 1,200 complaints from the Consumer Financial Protection Bureau’s complaint database, the authors conclude that fewer than half of the complaints filed under student loan servicing in the database reference something under loan servicers’ control, while 34 percent of the complaints are actually about the terms and rules of the federal loan program, which servicers do not set. This suggests that one solution to frustration and dissatisfaction with student loan servicing can be found in a simpler student loan program.
Introduction
Americans are anxious about rapidly rising levels of student debt. They wonder whether payments are affordable and if financing college with debt will pay off in the end. But recent news headlines suggest another issue is increasingly on borrowers’ minds: bad customer service and shoddy advice during loan repayment. This can leave borrowers feeling confused and cheated and can even lead them to incur additional costs.
The view that this is a widespread problem has prompted several states to enact laws aimed at loan servicing.1 Similarly, several lawsuits that allege borrowers were cheated by bad loan servicing are working their way through the courts.2 Some in Congress have even called for a national “student loan bill of rights” to guard against bad loan servicing.3
Nearly all student debt is issued through the federal government’s student loan program, though the government does not actually service the loans itself. Instead, it hires private contractors (“servicers”) to handle most interactions with borrowers. In fact, borrowers with federal student loans interact with the US Department of Education only under a limited set of circumstances when repaying their loans, such as by submitting applications and other forms on the department’s website. Servicers process payments, staff call centers, maintain websites, send account statements, and inform borrowers of repayment options. Concerns over the quality and reliability of loan servicing are thus generally directed at the private contractors that collect the loans on the government’s behalf, rather than at Congress or the department, which set the repayment terms for borrowers.
There is, however, a risk in automatically blaming servicers when borrowers believe they were mistreated. The alleged mistreatment may actually lie with the design of the loan program itself, not in how loans are serviced. In such cases, Congress and the department are responsible for the problem—and the solution.
In this report we measure the extent to which concerns and complaints about servicing in the federal student loan program could instead be misidentified complaints about the program’s design. We analyzed a random sample of 1,200 out of 12,113 complaints borrowers have submitted to the Consumer Financial Protection Bureau’s (CFPB) database that were classified as complaints against federal student loan servicers.4 We did not attempt to verify the complaints or determine whether borrowers’ descriptions of events were accurate. Instead, we aimed only to assess the central topic about which a borrower complained.
We found that 44 percent of complaints referenced something under loan servicers’ control. In other words, fewer than half of the complaints filed under student loan servicing are about student loan servicing. Thirty-five percent of the complaints were about the terms and rules of the federal loan program, which servicers do not set. Another 12 percent of the complaints were not related to servicing or the terms of the loan but were complaints about institutions of higher education, debt relief companies, or some other matter. The remaining 9 percent contained so little information (or were so garbled) that we could not categorize them.5
Read the full report.
Notes
1. For more detail on state legislation in California, Colorado, Connecticut, the District of Columbia, Illinois, Maryland, New York, and Washington, see Cal. Code Regs. tit. 10, § 2032-44; 2019 Colo. Sess. Laws, 1855; 2015, Conn. Acts, 15-162. (Reg. Sess.); DC Mun. Regs. tit. 26, § C30 (2018); 110 Ill. Comp. Stat. 992 (2018); Maryland House Bill 594 (Chapter 546); New York NY Banking Law § 14-A (2019); and 2018, Wash. Sess. Laws, 461.
2. For more detail on lawsuits against servicers see Commonwealth of Pennsylvania v. Navient Corporation, 354 F.3d 529 (3rd Cir. 2018); Consumer Financial Protection Bureau v. Navient Corporation, 3:17-CV-101 (M.D. Pa. 2018); Lawson-Ross v. Great Lakes Higher Education Corporation, 18-14490 (11th Cir. 2018); Nelson v. Great Lakes Educational Loan Services, Inc., No. 18-1531 (7th Cir. 2019); and Student Loan Servicing Alliance v. District of Columbia 351 F.3d 26 (D.D.C. 2018).
3. Student Loan Borrower Bill of Rights of 2019, S. 1354, 116th Cong., 1st Sess., § 3.
4. At the time we downloaded complaints for analysis, there were 12,113 complaints with narratives, which is the universe of complaints from which we drew our sample, and roughly 9,000 more complaints without narratives. In complaints without narratives, the borrower selected complaint topics from the CFPB’s menus but did not further explain the issue with a written description. Because we rely on the narratives for our analysis, we sampled only from the complaints with narratives.
5. See CFPB Complaint 2867039 for an example of such a complaint. “School XXXX XXXX Lender XXXX XXXX XXXX XXXX Guarantor XXXX XXXX XXXX/NAVIENT Disbursement Date XX/XX/XXXX Original Principal ($6,000.00) XXXX XXXX Lender XXXX XXXX XXXX XXXX Guarantor XXXX XXXX XXXX/NAVIENT Disbursement Date XX/XX/XXXX Original Principal ($1,000.00) School XXXX XXXX Lender XXXX XXXX XXXX XXXX Guarantor XXXX XXXX XXXX/NAVIENT Disbursement Date XX/XX/XXXXXX/XX/ XXXX Original Principal ($3,500.00) School XXXX XXXX Lender XXXX XXXX XXXX XXXX Guarantor XXXX XXXX XXXX/NAVIENT Disbursement Date XX/XX/XXXXXX/XX/XXXX Original Principal ($3,500.00) XXXX XXXX Lender XXXX XXXX XXXX XXXX Guarantor XXXX XXXX XXXX/NAVIENT Disbursement Date XX/XX/XXXX Original Principal ($6,000.00).” |
