Annual Report of the CFPB Student Loan Ombudsman

The 2024 Annual Report of the CFPB Student Loan Ombudsman highlights the severe difficulties reported by student borrowers due to persistent loan servicing failures and program disruptions. To assist struggling borrowers, the Department of Education implemented reforms resulting in billions of dollars in loan cancellation for almost 5 million borrowers, but servicing failures and legal challenges have hampered the implementation of critical loan relief efforts, including the Saving on a Valuable Education (SAVE) plan. The report highlights challenges facing borrowers, such as:

• Servicer failures that cause borrowers to pay inflated amounts that jeopardize their financial well-being: Borrowers described problems with billing, including inaccurate or late statements; errors with auto pay, including thousands of dollars incorrectly debited from accounts; and payments that were not properly applied to their balances. They also said servicers failed to give accurate guidance about income-driven repayment plans and imposed costly delays in processing refunds and applications for loan relief.
• Legal challenges to the SAVE program are delaying loan relief: Because of ongoing litigation, enrollment in and implementation of SAVE is on hold. The eight million borrowers already enrolled in SAVE are no longer able to make payments, enroll in most other income-driven repayment plans, or gain credit towards cancellation while the litigation is ongoing. The hundreds of thousands of additional borrowers waiting to enroll in income-driven repayment plans are similarly left with few options.
• Customer service "doom loops" and inaccurate communications: Borrowers reported being shuffled between servicers repeatedly without receiving help, waiting months for responses, and receiving inaccurate or misleading communications, such as miscalculated payment amounts and inaccurate due dates. Across the consumer complaint narratives highlighted in the report, borrowers waited an average of eight months for servicers to resolve their issues.

Although the federal student loan system faces many serious challenges, the private loan system can often be a riskier alternative for borrowers because private student loans are typically more expensive and offer worse terms than federal loans. While recent administrative efforts at reform have demonstrated that it is possible to relieve some of the burden of student debt for millions of borrowers using existing tools, they also underscore the need for clear legislative action to stabilize the federal student loan program and address the root causes of borrower harm.

The report also recommends several systemic reforms to improve the federal student loan system, including holding borrowers harmless when they encounter servicing errors and ensuring that servicers are held accountable for performance failures. It also notes the importance of considering broader changes to the student loan system to reduce the persistence and prevalence of student loan debt.

Full report

Read the full annual report