Rohit Chopra, director of the Consumer Financial Protection Bureau, speaks during a Senate Banking, Housing, and Urban Affairs Committee hearing in Washington, D.C., Dec. 15, 2022.
Ting Shen | Bloomberg | Getty Images
When student loan servicers make errors by cutting corners or sidestepping the law, it can “pose serious risks to individuals and the economy,” said Consumer Financial Protection Bureau Director Rohit Chopra.
Chopra’s comments are part of an “issue spotlight” released by the bureau Friday, outlining a number of problems borrowers faced when their payments resumed in October after the pandemic-era pause of more than three years expired.
Borrowers experienced long phone hold times with their servicers, significant delays in the processing of their repayment applications, and inaccurate and untimely billing statements, the bureau found.
The U.S. Department of Education announced Friday that it would withhold payments to three student loan servicers as part of its efforts to hold the companies accountable.
The federal government contracts with different companies to service its student loans, and pays the servicers a total of more than $1 billion a year to do so, according to higher education expert Mark Kantrowitz.
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Aidvantage, EdFinancial and Nelnet “all failed to meet contractual obligations to send timely billing statements to a combined total of 758,000 borrowers for the first month of repayment,” the department said.
As a result, it is withholding $2 million from Aidvantage, $161,000 from EdFinancial and $13,000 from Nelnet, it said, based on the number of borrowers affected by each company’s errors.
“Today’s actions make clear that the Biden-Harris Administration will not give student loan servicers a free pass for poor performance…
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