Many federal student loan borrowers faced long hold times on the phone, experienced significant delays in application processing and received inaccurate bills when payments resumed in October, according to a report released Friday by the Consumer Financial Protection Bureau.
When the three-plus-year pandemic pause ended, many borrowers needed help from a live agent at their student loan servicers – the companies contracted by the government to collect payments – to do things like switch repayment plans or answer questions about bills they believed to be incorrect.
But borrowers who called in October waited an average of more than 70 minutes to speak to a live agent, according to what servicers reported to the CFPB, a federal agency.
Roughly half of the borrowers who called during the last two weeks of October hung up before connecting with a representative.
Bringing roughly 28 million student loan borrowers back into payment after a yearslong pause was expected to be a challenge. The report includes some of the first data about how student loan servicers performed.
When borrowers cannot reach their student loan servicers, it could put them at risk of missing payments.
The Department of Education said previously that roughly 40% of the borrowers who had bills due in October did not make payments by mid-November. But thanks to an on-ramp period created by the government, borrowers who miss a payment through September 2024 won’t be reported as delinquent or in default to the three national credit bureaus.
Also Friday, the Department of Education said it is withholding payments to three student loan servicers for failing to “send timely billing statements” to a total of 758,000 people for the first month of repayment.
The department is withholding payment of $2 million from Aidvantage, $161,000 from EdFinancial…
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