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Updated October 29, 2020
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Update: Note that the suspension of the repayment of student loans has been extended until the end of September 2021.
Borrower complaints about federal and private student loans fell dramatically in 2020 from a year ago – down 24% and 33%, respectively – according to the latest Annual Report of the Consumer Financial Protection Bureau’s Student Loans Ombudsman.
The CFPB admitted that the drop in complaints for the year ending August 31 (around five months after the start of the coronavirus pandemic) could be reversed once the pandemic-related relief measures are completed.
Among these aid programs, the The CARES law is promulgated March 27 granted federal loan borrowers an initial six-month reprieve from making their monthly payments, with no accumulation of interest or negative effects on credit reports. The government has since extended the repayment suspension until December 31.
And besides the possible end of COVID-19 aid measures from the Department of Education and private lenders, there could be further confusion for federal loan borrowers if the Department of Education steps up its pace. new loan officer system in 2021.
Based on the information of his consumer complaints database, the CFPB said borrower complaints referring to COVID-19 accounted for a weekly average of 20% of all student loan problems.
American Educational Services/ PHEAA accounted for most federal loan issuance, with 33% of the total. And as in the 2019 CFPB Ombudsman Report, Navigate was one of the most frequent targets of borrower anger – the nation’s largest loan manager was responsible for 31% of all federal loan complaints and 41% of all private lending complaints.
Among the other conclusions of the 2020 report, the CFPB highlighted the impact of graduation rates on student loan default. With college attendance likely to drop in the wake of the pandemic – 13% of students delayed graduation due to COVID-19, according to the National Bureau of Economic Research – It should be noted that borrowers who do not graduate are three times more likely to default on their debt than their peers who graduate.
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