Update: Note that the repayment suspension on student loan repayment has been extended through the end of September 2021.
Borrower complaints about federal and private student loans decreased significantly in 2020 from the previous year — down 24% and 33%, respectively — according to the latest annual report from the Consumer Financial Protection Bureau’s student loan ombudsman.
The CFPB admitted that the decline in complaints for the year ending Aug. 31 (about five months into the coronavirus pandemic), could be reversed once pandemic-related relief measures end.
Among these aid programs, the CARES Act passed into law on March 27 gave federal loan borrowers an initial six-month reprieve from making their monthly payments, without interest accruing or negative effects to credit reports. The government has since extended the repayment suspension through Dec. 31.
And besides the possible end of COVID-19 aid measures from the Department of Education and private lenders, there could be additional confusion for federal loan borrowers if the Education Department accelerates its system of new loan servicers in 2021.
Based on information from its consumer complaint database, the CFPB said that borrower complaints referencing COVID-19 comprised a weekly average of 20% of all student loan problems.
American Education Services/PHEAA accounted for the most federal loan issues, with 33% of the total. And as in the 2019 CFPB ombudsman’s report, Navient was among the most frequent targets of borrowers’ ire — the country’s largest loan servicer was responsible for 31% of all federal loan complaints and 41% of all those relating to private loans.
Among other findings in the 2020 report, the CFPB highlighted the impact of graduation rates on student loan default. With college attendance likely to fall in the pandemic’s wake — 13% of students have delayed graduation because of COVID-19, according to the National Bureau of Economic Research — it’s worth noting that borrowers who don’t graduate are three times more likely to default on their debt than peers who receive a diploma.