Complaints by student loan borrowers have driven actions that have produced more than $750 million in relief for student loan borrowers and strengthened the student loan repayment process for millions more, the Consumer Financial Protection Bureau (CFPB) said in a report released Monday (Oct. 16).
According to the agency, it received more than 20,000 complaints in 2016 from student loan borrowers. The complaints, CFPB said, led to changes in the repayment process including automatic student loan interest-rate reductions for eligible servicemembers, more protections around federal student loan repayment relief, and the elimination of surprise “auto defaults” from most new private student loan contracts.
In a release, CFPB said more than 1.2 million student loan borrowers defaulted in 2016, and that 44 million now owe money with combined federal and private student loan debt at about $1.4 trillion, mostly from federal loans. More than 8 million student loan borrowers have gone at least nine months without making a required monthly payment and are in default, the bureau stated.
The agency’s report, it says, looks at how student borrower complaints have driven government action targeting illegal acts or practices, “as well as new borrower protections and industry reforms.” Among the new protections the bureau listed:
- More than 100,000 military borrowers saved at least $20 million last year due to automatic interest-rate reductions;
- Millions of borrowers are protected from servicing practices that improperly or illegally denied payment relief;
- Surprise “auto defaults” eliminated from the majority of new private student loan contracts;
The agency report states that it has handled about 50,700 student loan related complaints and sent complaints to about 360 companies, in total, including student loan servicers, debt collectors, private student lenders, and companies marketing student loan “debt relief.”