Which Companies Had the Most Student Loan Complaints in 2022?

Before you take out a student loan, read up on the worst lenders of 2022

There are more than 43.6 million student loan borrowers in the United States, making it one of the largest types of consumer debt—second only to mortgage loans. Student loan borrowers owed a total of $1.766 trillion ($1.645 trillion of this is federal loans), and the average balance was $37,718 for federal loans, as of August 20, 2023.

That's a lot of money to have to pay back. But it can be a saving grace when you can't afford the rising cost of education. Although being approved for a student loan is the first step, you may find some hiccups with your student loan provider. This article looks at the companies with the most student loan complaints filed with the Consumer Financial Protection Bureau (CFPB) and may help guide you before you actually apply.

Key Takeaways

  • A student loan is a form of debt used to pay for education-related expenses.
  • The Consumer Financial Protection Bureau compiles an annual list of consumer complaints received by student loan providers.
  • The CFPB received 8,407 complaints about student loans between September 2021 and August 2022.
  • Navient was the lender with the most complaints about private student loans.
  • AES/PHEAA was the lender with the most complaints about federal student loans.

Student Loan Basics

One of the most important things people need to consider before applying for college is how they expect to pay for it. Some people are able to afford their education upfront, usually with the help of parents or family. But that's not the case for everyone. Many families plan ahead by opening a college savings plan, while others work their way through school to pay tuition fees and related expenses.

But even with these options, many college-goers still need a financial boost. This means they may have to turn to student loans.

A student loan is a type of debt individuals take out to help pay for the costs associated with education—generally higher education. This includes undergraduate and graduate studies, doctorates, medical and dental school, and others. Student loans can be used to pay for tuition, housing, fees, and other related expenses.

Loans fall into two different categories: federal and private. Federal student loans are administered by the U.S. Department of Education. Qualifying for one of these loans requires completing an application. This is called the Free Application for Federal Student Aid (FAFSA).

Loan eligibility and approval are based on personal circumstances and financial information for applicants and their families. Private loans, on the other hand, are issued by private lenders such as banks, credit unions, and other financial institutions. While federal loans are based on financial need and merit, private loans are based on credit history. Interest rates also differ between the two. While federal loans tend to have lower rates, private lenders often charge borrowers much higher rates.

The CFPB Report

The Consumer Financial Protection Bureau collects complaints from the general public about financial products and services. These complaints are put into a database, published, and sent to the company. Complaints are divided by product and service into a database, which consumers may access at any time.

Student loan complaints are filtered through an ombudsman to help provide borrowers with assistance. These complaints are compiled into a report published by the agency every year. This report is sent to several committees as well as the following individuals:

  • The Secretary of the Treasury
  • The Secretary of Education
  • The CFPB's director

The tenth annual report was published in October 2022. The information compiled into the report was collected between September 1, 2021, and Augugust 31, 2022. A total of 8,407 complaints were lodged with the agency. Of them, 5,445 (65%) were related to federal loan providers, while 2,962 (35%) were against private loan providers.

Student Loan Complaints

Consumers identified the following issues as being the most troublesome when it came to their student loan providers:

  • Dealing with lenders or suppliers: The main complaint under this category was that people said they received bad information about their loans. This was followed by trouble with how payments are handled. The third complaint was problems dealing with customer service.
  • Difficulties repaying student loans: The main complaint under this section is that borrowers feel they can't get flexible repayment options. The second most common complaint under this category was that lenders didn't allow borrowers to delay making payments temporarily. The third category was problems borrowers encountered trying to lower their monthly payments.
  • Problems related to borrowers' credit reports or scores: Borrowers complained about incorrect account statuses. The second largest complaint was that lenders didn't fix errors on the borrowers' credit reports. The third-largest complaint was about incorrect account information.

In the table below are the companies with the most complaints about private student loans.

Company Name Number of Complaints
Navient 761
SLM Corporation 272
Nelnet 229
Discover Bank 69
Source: Annual Report of the CFPB Education Loan Ombudsman

You can submit a complaint about your student loan or other financial product/service directly to the CFPB through its website.

The companies in the table below had the most complaints about federal student loans.

Company Name Number of Complaints
Navient 771
Nelnet 611
Maximus Education 391
Source: Annual Report of the CFPB Education Loan Ombudsman

Special Considerations

The impact of the global COVID-19 pandemic must be considered relative to this report. The federal government provided some relief to federal student loan borrowers through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. For instance, borrowers of certain federal student loans qualified for temporary payment relief under the act, with payments initially halted until September 30, 2020.

The payment pause was extended multiple times, but ultimately expired in 2023. Interest began accruing in September with the first payments due again in October.

The Biden Administration had plan to forgive up to $20,000 of student debt for some borrowers. However, this plan was struck down by the Supreme Court which ruled the executive branch did not have the authority to carry out this plan.

Following the court ruling, the Department of Education began pursuing alternative legal routes for student debt relief. One of those measures was the Saving on a Valuable Education (SAVE) plan, which reduced the amount that most borrowers would have to pay on their loans.

The Department of Education began accepting applications for the SAVE Plan on August 22, 2023.

Under the new plan, the monthly payment falls from 10% to 5% of the borrower's discretionary income. The amount of income that is considered non-discretionary is increased to 225% of the federal poverty level, meaning that borrowers who make less than that amount will have 0% monthly payments. Those who qualify and continue to pay are eligible to receive a 0% interest rate, allowing them to pay their debt off much faster. Collections are stopped for those who are in default during this period.

In addition, the Department of Education announced a 12-month "on-ramp" for payments between October 2023 and September 2024. Over this period, interest on student loans will accumulate, but borrowers will not face delinquency or negative credit reports as a result of missed payments.

Although these provisions don't extend to private loans, many private lenders continue to provide some financial relief to their borrowers by making accommodations such as payment deferrals and other arrangements.

Can I Sue My Student Loan Servicer?

Generally, you can sue your student loan servicer as a borrower; however, if there is a class-action lawsuit against your provider or school, you automatically become a part of the class-action lawsuit but are not directly suing any party. If the lawsuit is determined in favor of the suing party, then you will share in the awarded amount. You can file a separate lawsuit on your own, depending on the specific situation.

How Do I File A Complaint Regarding My Student Loans?

To file a complaint related to student loans or your servicer, you have a few options. The best place to start is filing a complaint with your student loan provider, either by phone, online, or email. You may also file a complaint with the Consumer Financial Protection Bureau and the U.S. Department of Education. The contact information is provided on their websites.

What Organization Oversees Student Loans?

The organization that oversees federal student loans is the office of Federal Student Aid. Private student loans are overseen by the private lender that issued the loan.

The Bottom Line

Using the information above can help you better prepare yourself before you start to fill out your student loan applications. But remember that this should serve as just a guide. You don't have to eliminate a lender because it appears on the list. Base your decision on your personal situation.

Article Sources
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