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Advocacy Group Mimics Consumer Bureau's Discontinued Student Loan Report

The private loan servicing company drawing the most complaints is Navient.

In August, the student loan ombudsman at the Consumer Financial Protection Bureau submitted an angry resignation letter. Seth Frotman, after seven years as that job’s inaugural occupant, was fed up with then-acting director Mick Mulvaney’s reorganization of the loan division in a way Frotman said favored companies over consumers.

Five months later, after the bureau now led by Kathy Kraninger declined for the first time to release an annual ombudsman’s report on student complaints about loan servicing both from government and private entities, the Hoboken, N.J.-based for-profit student loan counseling group LendEDU is seeking to fill in the gap. The group released its own version of the student loan complaint annual summary on Tuesday, using the same datapoints and methodology employed by CFPB.

“Throughout 2018, consumers submitted nearly 10,000 student loan-related complaints to the CFPB,” said a summary by LendEDU research analyst Michael Brown. The private report delivers the same mission requirement that, under the 2010 Dodd Frank Wall Street Reform Act, the CFPB’s ombudsman “shall compile and analyze data on student loan complaints and make appropriate recommendations to the secretary of the Treasury, the director of the Consumer Financial Protection Bureau, the secretary of Education and Congress.”

It comes at a time when the Trump administration, at both CFPB and the Education Department, has been recasting student loan procedures in order to reduce the regulatory burden on lenders.

Between Jan. 1, 2018, and Dec. 19, 2018, there were 8,340 student loan-specific complaints filed with the CFPB, the report said. Of those, 64 percent pertained to federal student loans, while 36 percent dealt with private student loans. That works out to 26 student loan-specific complaints per 1 million U.S. residents, the analysis said.

The three main issue options are “dealing with lender or servicer,” “struggling to repay a loan,” and “problem with credit report or credit score,” said the report, which includes charts and company rankings.

“The most complained-about student loan company was Navient,” which in recent years has been the subject of litigation, the report said. As many as 42 percent, or 2,239 complaints, of the 5,362 federal student loan complaints were lodged against Navient. AES/PHEAA was the closest pursuer, representing 26 percent, or 1,399 complaints, of all federal student loan complaints, the report said.

The CPFB responded to Government Executive’s inquiry by noting that LendEDU “pulled its report from our public consumer complaint database.”