In the first seven months of 2018 alone, the Consumer Financial Protection Bureau (CFPB) reported that servicers originated more than 917,000 federal and private student loans, adding $16.6 billion to the $1.48 trillion borrowers already owe. With all that outstanding debt it’s not surprising that the CFPB received nearly 10,000 student-loan–related complaints between Jan. 1 and Dec. 19 of this past year.
A New Complaint Report
In the past the CFPB has released an annual report detailing student-loan–related complaints compiled by the bureau’s student loan ombudsman. This year, however, the report was not released following a restructuring of the ombudsman’s office that involved folding it into the financial education office. At the same time, acting CFPB director Mick Mulvaney announced that the CFPB would shelve plans to develop rules related to bad practices by student loan servicers.
In the absence of the CFPB report, online loan marketplace LendEDU compiled complaints from the 2018 CFPB complaint database and released a report that contains much of the same information found in previous CFPB student loan complaint reports.
How the CFPB Categorizes Complaints
The CFPB breaks down student-loan–related complaints into two categories:
- those that deal directly with either private or federal student loans
- those that address debt collection for either private or federal loans.
For its report, LendEDU pulled 8,340 student-loan–specific complaints (the first group) from the CFPB database: The majority (64%) referred to federal student loans; 36% dealt with complaints about private student loans. On the debt-collection side, 1,606 complaints were pulled and analyzed.
The 10 Worst Companies for Student Loan Complaints
Five companies appear on both the federal and private student loan “most complained about” lists. They are: Navient Solutions, AES/PHEAA, Nelnet Inc., Great Lakes and ACS Educational Services. The two charts below show the 10 worst companies for federal student loan complaints and for private student loan complaints, respectively, both by volume and by number.
Federal Loan Servicers with the Most Complaints Per Million Loan Recipients
Some student loan servicing companies are much larger and deal with more borrowers than others, making a comparison between the number of complaints against such companies vs. complaints against smaller companies with fewer borrowers potentially unfair.
To address this, LendEDU created a table that ranks the four federal student loan servicers that received the most complaints in 2018 per million recipients as a way of normalizing the data. The companies' numbers of recipients are taken from the Department of Education's Federal Student Aid website.
The table below shows that when ranked on a per-million-recipients basis, Navient, AES/PHEAA, Nelnet and Great Lakes retained the same rank order as in the first table above.
The Most-Complained-About Company
The most-complained-about student loan company in 2018, regardless of category, was Navient. It was the source of 42% of federal student loan complaints and 53% of private student loan complaints received by CFPB this past year. In addition to federal and private student loans, Navient also handles Parent PLUS loans.
Navient spun off from Sallie Mae in 2013 and since then has been at or near the top of the list for most student loan complaints received by the CFPB. In 2017, Navient was the most-complained-about company for student loans in every single state and Washington, D.C. For 2018, Navient had the most complaints in any state except Alaska, Wyoming and Washington, D.C., where AES/PHEAA took the honors.
LendEDU noted in its report that not long ago, “A U.S. district court judge shot down a request by Navient to have a lawsuit dismissed. The suit, filed by Pennsylvania Attorney General Josh Shapiro, alleges Navient violated state law by pushing borrowers toward costly repayment programs. The company is also dealing with lawsuits from California, Illinois and the CFPB itself.”
Issues That Matter Most to Borrowers
Just as important as the number of complaints received are the issues those complaints address. For federal student loans, the main issues are “dealing with lender or servicer,” “struggling to repay a loan” and “problem with credit report or credit score.”
The chart below shows the 10 student loan companies with the greatest number of federal loan complaints, including the percentage of complaints reported about each issue. (Mouse over the bars to see which issue each color represents.)
For private student loans, complaints are the same as those for federal loans with the addition of “getting a loan.” This issue crops up because private student loan providers can be picky when it comes to approving loans, whereas federal student loans are widely available to almost anyone. The graph below shows the most-complained-about private student loan companies and breaks down the percentage of each of the four issues related to those complaints for each company.
Companies with the Most Debt Collection Complaints
To evaluate debt collection complaints, LendEDU broke data into three categories: (1) Most Federal Student Loan Debt Collection Complaints; (2) Most Private Student Loan Debt Collection Complaints; (3) Most Total Student Loan Debt Collection Complaints.
Once again Navient held the dubious honor of “most complained about” in all three categories, as the graph below illustrates. Complaints about federal debt collection were more prevalent than complaints about private student debt collection.
Note that there are rules limiting how debt collection agencies can behave. If you believe that you are being harassed, you may have tools to fight back.
The Bottom Line
Use the information above to help you shop for a student loan servicer. This list of top student loan providers, for example, contains some names that appear in this article, including Navient, Nelnet, SoFi and Wells Fargo, but also a few that are not on the “most complained about list,” such as Citizens Bank, LendKey and CommonBond.
Just because a servicer had complaints filed against it doesn’t mean you shouldn’t consider it. CFPB complaints filed in 2018 represent a fraction of all student-loan originations last year, which means the likelihood of having a problem is low.