Total student loan complaints handled by bureau down by about half over past 2 years, new ombudsman’s report shows

The agency charged with consumer financial protection handled approximately 20,600 complaints related to private or federal student loans from Sept. 1, 2017, through Aug. 31, 2019, according to the first student loan ombudsman annual report from the agency in two years and released Tuesday.

That equals the total number of complaints reported for 2017, according to bureau data, indicating a decline of 50% in total complaints handled regarding federal and private student loans over the past two years.

That 20,600 in total complaints handled from Sept. 1, 2017, through Aug. 31, 2019, by the Consumer Financial Protection Bureau (CFPB) included about 6,700 private student loan complaints and 13,900 federal student loan complaints, according to the report.

Annually, the numbers show:

  • For the year ending Aug. 31, 2018, the bureau handled approximately 3,800 private student loan complaints, a decrease of approximately 50% compared to that of the previous year, 2017. It also handled approximately 7,200 federal student loan complaints, a decrease of approximately 44% compared to 2017.
  • For the year ending Aug. 31, 2019, the bureau handled approximately 2,900 private student loan complaints, a decrease of approximately 25% compared to that of the previous year, 2018. It also handled approximately 6,600 federal student loan complaints, a decrease of approximately 8% compared to 2018.

The report also notes that the bureau also handled approximately 4,600 debt collection complaints related to private or federal student loans, “approximately 18% of student loan complaints and debt collection complaints about student loans.” It adds that over the past 24 months, “federal and state law enforcement agencies, including the Bureau, FTC, Department of Education and state Attorneys General Offices have successfully brought numerous enforcement actions against student loan debt relief companies with judgments totaling hundreds of millions of dollars.”

Tuesday’s report on student loan complaints is the first provided by Brian G. Cameron, who was appointed the CFPB’s private education loan ombudsman in August. Given the brief amount of time to draft a report, and the fact that this report covered two years instead of one (no report was provided last year), Cameron said he decided to focus on complaints and student loan debt relief scams, “two subjects that, if promptly addressed, may have the greatest immediate impact in preventing potential harm to borrowers.”

Among Cameron’s recommendations are that policymakers, the Department of Education, and the bureau assess and consider the sharing of information, analytical tools, education outreach, and expertise to prevent borrower harm, and when harm occurs, to “reduce the window in which harm is occurring through timely identification and remediation.” He also suggested that, with regard to student loan debt relief scams, enforcement should be expanded beyond civil enforcement to criminal enforcement actions “at all levels.”

He also suggested that policymakers consider “providing limited exceptions to existing statutes” to permit more flexibility regarding the types of data collected in complaints “so that such data elements and complaints may be more reflective of, and responsive to, the changing environment.”

The bureau had been without a student loan ombudsman for nearly a year following the resignation of Seth Frotman, who charged that the bureau, under Acting Director John (“Mick”) Mulvaney, had abandoned its consumer protection mission. He also charged in his resignation letter that, among other things, the bureau suppressed the publication of a report by bureau staff on “legally dubious account fees” charged by banks.

CFPB Private Education Loan Ombudsman Issues 2019 Annual Report

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