Last Updated on February 2, 2024 by Admin
[ad_1]
Long wait times and wrong billing statements are just a few issues student loan borrowers are facing. (iStock)
Student loan borrowers have met multiple hurdles as student loan repayment restarts, a Consumer Financial Protection Bureau report explains.
From long customer service hold times to payment plan delays and incorrect billing statements, borrowers have found it difficult to start paying again.
Borrowers spent an average of 73 minutes waiting on hold to talk with a live customer service agent, leading to many callers disconnecting before receiving the service they were looking for. Back in August 2023, the average wait time was just 12 minutes.
At the same time, 450,000 applications for income-driven repayment plans submitted between August and October 2023 were pending for at least 30 days, forcing borrowers to continue making high monthly payments, the CFPB said.
As soon as payments resumed, borrowers started receiving confusing and inaccurate bills from their lenders. Some statements showed payment dates that occurred before the end of the payment pause. Others had high monthly payments based off incorrect income calculations.
“The resumption of student loan payments means that borrowers are making billions of dollars of payments each month,” CFPB Director Rohit Chopra said in the report. “If student loan companies are cutting corners or sidestepping the law, this can pose serious risks to individuals and the economy.”
There are a few actions the government is taking in response to this botched restarting of payments, hoping to hold servicers liable for their errors.
To help ease the burden of student loan payments, refinancing high-interest loans into one with a lower interest rate can help. Credible helps you compare rate options from a variety of lenders, with no effect on your credit.
STUDENT LOAN BORROWERS STRUGGLE TO KEEP UP WITH MONTHLY PAYMENTS: STUDY
These servicer delays have not come without a cost. To hold student loan servicers accountable, the Biden-Harris Administration has started withholding payments from servicers responsible for these long wait times and billing errors.
Two million dollars is being withheld from Aidvantage, $161,000 from EdFinancial and $13,000 from Nelnet. These companies made errors that affected 758,000 borrowers and caused some to pay more than expected in monthly payments.
“We will not allow servicers to cause harm to borrowers as they resume making their monthly payments,” Federal Student Aid Chief Operating Officer Rich Cordray said. “We are committed to providing a seamless repayment experience for borrowers.
“We will continue our strong oversight and efforts to hold servicers to their contractual obligations and make sure borrowers are not harmed by these errors,” Cordray continued.
If you can qualify for a student loan refinance at a lower rate than you’re currently paying, there are few downsides to refinancing. You can use Credible to compare student loan refinancing rates from multiple private lenders at once without affecting your credit score.
HIGH COST OF LIVING MAKING IT DIFFICULT FOR MOST AMERICANS TO MEET FINANCIALS GOALS IN THE NEW YEAR
On top of student loan payment issues, the Department of Education’s relaunch of the Free Application for Federal Student Aid (FAFSA) didn’t go as planned either.
There was an initial delay that postponed the FAFSA launch to December 31st 2023 from the usual October 1st date. Starting on the 31st, borrowers reported that the form was available for extremely limited windows.
While the Department was still working out tech issues and had said the form wouldn’t be available at all times, the glitches users faced paired with these very short windows of time led to many incomplete applications.
“We know the Department of Education is working to bring the FAFSA online 24/7, but until that happens, and until we know more details about when schools will begin receiving finalized applicant data, schools cannot provide realistic timelines about when students and families will receive financial aid offers,” NASFAA President Justin Draeger said.
Don’t worry about having to navigate student loan options on your own. Credible can help compare student loan companies.
$44.5 MILLION IN FEDERAL FUNDING GOING TOWARD RURAL COMMUNITIES TO IMPROVE HIGHER EDUCATION ACCESS
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
[ad_2]
Source link
