Sallie Mae leads Consumer Financial Protection Bureau complaints about student loans

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Tuesday, October 1, 2013

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File photo of Sallie Mae's headquarters in 2007
Image: Joshua Davis.

A review this week by Wikinews of US Consumer Financial Protection Bureau (CFPB) complaints about student loans in the United States shows Sallie Mae leads all lending institutions in complaints. Of the 4,851 complaints dating back to March 2012 when the CFPB first began collecting student loan data, 2,262 or 46.6% of all complaints were about the lender. US Federal Reserve data from 2010/2011 shows Sallie Mae is the nation's largest student loan lender, responsible for 25% of the market

The other major lenders in this space include Wells Fargo, JP Morgan Chase, PNC, and Discover. In complaints, AES/PHEAA came in second with 546, or 11.3% of all complaints. Wells Fargo, Citibank and JPMorgan Chase each had between 5% and 7.5% of all complaints, totaling 918 complaints between them. 78 other lending institutions round out the list of organizations with complaints filed against them for student loans.

Few of the complaints originate from people with problems with federal student loans. Less than 1%, 35 total, are for these types of loans, with Sallie Mae accounting for the bulk of complaints with 17 total. 14 other lending institutions have 3 or fewer complaints. For non-federal student loans, Sallie Mae is still the leader for complaints, with 2245 or 46.6% of all non-federal student loan complaints.

The Consumer Financial Protection Bureau sorts complaints into three issues: Problems when you are unable to pay, Repaying your loan, and Getting a loan. None of the federal loans had complaints about getting a loan. For non-federal loans, 65.5% of the 4,816 complaints related to loan repayment. Sallie Mae led in total complaints in this category with 1467. They were followed by AES/PHEAA with 356, Wells Fargo with 231, Citibank with 201, Discover with 158, JPMorgan Chase with 154, ACS Education Services with 143, and KeyBank NA with 116. CFPB says loan repayment issues include a basket of claim types including "fees, billing, deferment, forbearance, fraud, and credit reporting." Problems when you are unable pay accounts for 30.8% of the complaints. Sallie Mae had 698 complaints. They were followed by AES/PHEAA with 181, JPMorgan Chase with 106, Wells Fargo with 104, Citibank with 70, and KeyBank NA with 58. Many of the complaints are, according to the CFPB, because borrowers have difficulty getting deferrments on loan repayment as a result of being unable to find employment.

Month by month complaints against major lenders
Image: Laura Hale.

The total complaints against Sallie Mae for September of this year is 2 fewer than the same time last year. The company's performance this year compared to last year has been mixed. March and June numbers were down over 150 complaints from the same month a year before. April, May, July and August all saw increases of 17–43. Of the top six lenders by volume of complaints, only AES/PHEAA and Citibank saw drops every month between March and September from the total volume in the previous year. Wells Fargo had a gain of 1 in August and 6 in May from the previous year. JPMorgan Chase had a difference of 0 from the same month last year for April, 3 more this year for May, and 4 more for August. Discover saw an increase every month from the same period last year except for September. When the total complaints differences from year to year for March to September are counted, this year has 571 fewer complaints against the top six lenders.

Closure reason percentage for student loan complaints by lender
Image: Laura Hale.

Most, 1470, of the complaints against Sallie Mae were closed with explanations. 10.2% were closed with monetary relief. 7.7% were closed with non-monetary relief. 2.1% were closed with relief and 12.1% were closed without relief. AES/PHEAA's complaint closure picture was much different. 40.1% of AES/PHEAA's 546 complaints were closed with non-monetary relief, 35.3% were closed with explanations and 21.2% were closed without relief. Of the eight lending institutions with 100 or more complaints filed against them, Discover was the institution most likely to result in a closure with monetary relief with 12.9% of all their closures ending this way. Citibank was the institution with the highest percentage of closures ending with no relief at 26.0%.

Geographic distribution of student loan complaints
Image: Laura Hale.

Complaints over student loan lenders were geographically distributed, coming from 3,447 different zip codes. The largest cluster of complaints is for 20001, a Washington D.C. zip code with 10 complaints originating from there. 07950, the zip code for Morris Plains, New Jersey, and 37013, the zip code for Antioch, Tennessee, each had 8 complaints originating from them. Zip codes for Patchogue, New York; Philadelphia, Pennsylvania; Washington D.C.; and Arlington, Virginia each had 7 complaints originating from them. By volume of complaints by state, New York led with 497, with California second with 467, Pennsylvania third with 303, Florida fourth with 288 and Ohio fifth with 219 complaints. US Territories largely occupied the bottom spots. The Northern Marianas Islands, with a population of around 50,000, had 1 complaint. The U.S. Armed Forces – Pacific had 3. North Dakota and U.S. Armed Forces – Europe had 5 complaints each. South Dakota had 7. Wyoming had 8. Puerto Rico and Alaska had 9 each. Rounding out the bottom five states by volume of complaints, Mississippi had 11.

With the possibility of a United States government federal shutdown looming on October 1, student loans may be impacted because of potential for an automatic increase in interest rates.


Sources

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