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Many student-loan borrowers aren't getting the help they need from their servicers, according to a new report.
On Tuesday, the Consumer Financial Protection Bureau released the latest edition of its supervisory findings covering the auto and student loan servicing industries from April 2023 to December 2023.
Over the past few years, borrowers with both federal and private student loans have reported challenges with their servicers, from an inability to get the information they need to make their payments to inaccurate information. The CFPB's latest report detailed its findings that many of those companies did not operate in borrowers' best interests.
"Loan servicers and debt collectors harm borrowers when they fail to provide required information, create barriers to customer assistance, or harass people about their debts," CFPB Director Rohit Chopra said in a statement. "The CFPB is working to ensure servicers, debt collectors, and other financial service providers follow the law to protect consumers."
According to the report, servicers put up "excessive barriers" for borrowers when they needed help — specifically with hourslong hold times with customer service that lead to many borrowers dropping their calls without actually speaking to anyone. This was representative of an "unfair and abusive" act because servicers didn't give borrowers an avenue to resolve issues in a timely manner, the CFPB said, and since borrowers cannot choose their servicer, they had no other option but to continue waiting on the phone for help.
The hold times were not just inconvenient; the report also said it caused injury to borrowers because they were sometimes unable to make payments on time due to the lack of assistance from their servicer, resulting in late fees. The CFPB said that in response to its findings, servicers "developed plans to reduce hold times and drop rates."
Additionally, the report found servicers provided inaccurate information to borrowers regarding forms needed to qualify for certain program benefits or debt relief, like forbearance, delaying borrowers' abilities to access those benefits.
Federal servicers have previously said they do not have the funding they need to fully assist borrowers, which is a factor for the long hold times and errors borrowers have faced. Business Insider has also previously reported on the administrative difficulties some borrowers with private loans are facing to get debt relief — an issue the CFPB said it would be monitoring, as well.
Both President Joe Biden's administration and the CFPB have taken action against student-loan servicers for failing their contractual obligations. The Education Department withheld pay from all four major federal servicers for failing to deliver on-time billing statements to borrowers, and the CFPB recently filed a lawsuit against PHEAA, a servicer that facilitates private student loan programs, accusing it of illegally collecting discharged payments.
