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Struggling to keep up with student loan repayment


We’ve all heard the stories. Whether from our friends, colleagues, adult children, or through our own experiences, we know that student loan debt is taking a huge toll on students and graduates across the country. With the total volume of outstanding student debt amounting to well over a trillion dollars, we’ve heard stories of its impact on home buying, saving, the start of new businesses, new families, and more.

This summer, we had the pleasure of meeting Dani who shared her story with us. Her story was similar to many of the stories we receive on student debt. Dani, who graduated with a degree in elementary education, wasn’t making a lot of money. She was struggling to make ends meet and pay down her student loans. She was living in a family member’s basement located over an hour away from her job, driving a car in desperate need of repair, and trying to balance the cost of groceries against her student loan payments. At one point, she could not pay her student loans and received threatening calls as a result.

“I can’t even tell you the number of times I’ve cried over my finances… It’s not like I’m going out and saying, ’Oh, I don’t have to pay those.’ I want to, and it’s really hard to deal with not being able to.”

Dani was on a one-year reduced payment plan, but it was about to expire. She knew that her income still wasn’t enough to manage a full student loan payment so, before the reduced payment plan expired, she contacted her student loan servicer to find out what steps she needed to take to stay on the plan. Although they assured her that she’d be able to do so, her request to extend the plan was eventually denied. Dani continued to try to work with her student loan servicer but she was getting nowhere.

“I needed help. I contacted the CFPB because I really needed someone else on my side. There’s nothing that I was doing with this private student loan servicer that was changing anything, and I was stuck in a position that felt hopeless…”

The loan servicer reviewed her account and determined she was indeed eligible to stay on the reduced payment plan for another year. By reaching out to the CFPB, Dani was able to take charge of her student loan debt.

“It’s such a relief to be able to not have to worry about if I’ll have money for gas to get to work; or, not have to worry about whether or not I’ll have something to eat that week; or being able to afford a place to live.”

We’re glad that Dani got the help she needed by reaching out to the CFPB. Whether you’re struggling with student loans or planning how you’ll pay for college, we have tools to help you. You have the right to take charge of your student loan debt, so let us help you along the way.

To learn more about our recent work to help student loan borrowers, read our report on Student Loan Servicing.

Check out more stories from people like you, visit our Paying for College tool, and submit a complaint if you’re having a problem with your student loan.

New signs of trouble for student loan borrowers


Earlier this year, we asked you to share your stories about student debt stress. More than 30,000 of you responded, telling us that student loan servicers (the companies that send you a bill each month) can make it harder to manage your loans and may contribute to our nation’s growing student loan default problem.

Last month, we published a report based on your stories and issued a call for industrywide reforms to protect consumers.

Building on this work, today, we released our annual report on student loan complaints , taking a closer look at the problems experienced by certain student loan borrowers. We are particularly concerned about repayment problems facing those with older federal student loans that were made by banks and other private lenders. We found that servicing issues may make repaying student debt even harder for this group of borrowers, in particular.

Federal student loan borrowers may have loans made directly by the Department of Education (Direct Loans) or loans made by a private lender. Most federal student loans were made by private lenders until 2010 when the program (known as the Federal Family Education Loan Program or FFELP) was ended. These loans were once the most common way to borrow for college and borrowers with these loans still make up nearly a third of all student loan borrowers— owing more than $370 billion in outstanding debt.

Today’s report found that federal student loans made by private lenders may have a greater rate of borrowers in default and delinquency than the broader student loan market. This raises concerns about whether distressed borrowers with these loans are getting adequate information on repayment options from their servicers.

In fact, while the CFPB estimates that more than 1-in-4 student loan borrowers are delinquent or in default market-wide, today’s report reveals that at least 30 percent of FFELP borrowers—more than five million in total— are behind on their loans or are already in default. As one FFELP borrower told us:

“I have a loan with [servicer] and I have not been given any help dealing with my payment options. I have filled out applications for an [income-based repayment plan] and forbearance. Customer service is constantly giving me false information and not helping me to get my payments lowered…Please, help me. I am trying hard not to allow my loans to go into default. I am not trying to ignore my loans but how can I pay a $2,000 monthly payment. They are not helping me to resolve this payment to a payment that I can afford.”

Today’s report also notes:

  • Borrowers with federal loans made by private lenders report that they run into roadblocks when trying to access income-driven repayment plans, despite the right under federal law to do so. Borrowers with these loans generally have a right to enroll in payment plans that set their monthly payment based on their income. The complaints we received show that some student loan borrowers had trouble getting accurate information, having paperwork processed on time and staying on track once they were able to enroll. These problems can increase costs for borrowers and may contribute to driving some borrowers into default.
  • More than 1-in-5 of these borrowers are past-due or are not making payments, but are not yet in default. We also asked some of the largest student loan companies to share information about how their customers with these loans are doing. We looked at a sample of this data and found that more than 12 percent of these borrowers are behind and more than 10 percent are in forbearance (asking their servicer to let them take a break from making payments)—potentially signs of significant distress. We also know that more than four million borrowers with these loans are already in default, based on data published by the Department of Education.
  • Ninety-five percent of these borrowers are not enrolled in income-driven repayment plans. For the first time, today’s report sheds light on how many of these borrowers are enrolled in income-driven repayment plans. We found that, despite the widespread availability of these plans, the overwhelming majority of borrowers in our sample were not enrolled. This is particularly concerning given that borrowers in the standard monthly payment plan default on their loans at nearly five times the rate of borrowers who enrolled in income-based repayment, by one recent estimate.

Continuing signs of student debt stress among borrowers with federal loans made by private lenders is cause for concern. There remain many unanswered questions about how these borrowers fare over time, in part because there is very little public information available about the performance of federal loans made by private lenders.

Today’s report also calls for better information about the entire student loan market, including more details about delinquencies, defaults, and how borrowers in income-driven payment plans fare over time. It also shows why last week’s call to establish clear and consistent industry-wide standards is an important part of the Bureau’s ongoing work to help make sure student loan borrowers are treated fairly.

If you have questions about repaying your student loans, check out our Repay Student Debt feature of Paying for College to find out how you can tackle your student loan debt.

If you have a problem with your student loan, you can submit a complaint online or call us at (855) 411-2372.

When you make student loan payments on an income-driven plan, you might be in for a payment shock


When you make student loan payments on an income-driven plan, you might be in for a (payment) shock.

Earlier this year, we asked you to share your #StudentDebtStress story. More than 30,000 of you answered, telling us about payment processing problems, servicing transfer snags, customer service confusion, and obstacles for borrowers in alternative repayment plans. You can check out the comments that were posted.

For borrowers who are experiencing financial distress and looking for a way to pay back their federal student loans, income-driven repayment plans can be the key to helping you make ends meet. But for some borrowers seeking to tie their federal loan payment to their income, we know the road can be rocky. You’ve told us about problems related to enrolling in income-driven repayment plans that ended up costing you hundreds of dollars in unexpected payments. These problems include delays in processing your paperwork and incorrect information from customer service personnel.

We’ve also heard about detours and dead ends that prevent you from keeping your payments affordable under these plans, even when you’ve filled out the required paperwork. One borrower told us:

I submitted the required documentation for the 2015 [income-based] repayment plan 8 weeks before the expiration of my previous IBR application, and within the time period [my servicer] indicated. Due to [my servicer’s]delays, my IBR application was not processed timely. While waiting for them to process my application, [my] monthly payment jumped from approximately $200 a month to $1400 a month, causing me to go into overdraft on my checking account. [My student loan servicer] failed to process my application timely even though my application was complete and no documentation was missing and failed to communicate the huge increase in payment.

Filling in the gaps

As the Bureau and other federal agencies consider ways to improve the student loan repayment process, stories like these focus our attention and raise new questions about how common these problems may be. That’s why we’re sending a letter to student loan companies asking for more information about how they make sure student loan borrowers have the information they need stay on track.

The most common income-driven repayment plans are Income-Based Repayment (IBR) and Pay As You Earn (PAYE). Each year, borrowers in income-driven repayment plans are required to submit information, generally an income tax return, proving that they still qualify for an affordable monthly payment (known as “recertification” in student loan-speak).

We’d like to learn more about how well the process of recertifying works for most people. Because student lenders and student loan servicers are not required to release this information publicly, we don’t know how many borrowers fail to recertify on time. When borrowers don’t recertify on time, their payments will snap back to the amount they would have owed under a standard 10-year repayment plan—a jump of hundreds of dollars per month, in many cases. This can be a shock to those already struggling to make these payments.

Earlier this year, the Department of Education released the first public information about recertification rates, noting that more than half of all borrowers in its sample (57 percent) missed their deadline to recertify and had their payments snap back.

What you need to know

We’ve put together some helpful advice and information for borrowers enrolled in income-driven repayment plans.

Why it’s important for your recertification to be processed on time each year

If you’re having trouble affording your federal student loan payments, getting enrolled in an income-driven repayment plan may be an important first step to staying on the road to repayment. These plans help you get a payment you can afford. If your recertification is not processed on time, it can:

  • Cause the amount you owe each month to snap back to a payment you may not be able to afford. When your recertification isn’t processed on time, even if you tell your servicer you still want to keep your payments affordable, you will probably have a gap where you are required to pay an amount that doesn’t reflect your financial circumstances. You may not realize that things aren’t going according to plan until your bank has processed an automatic payment at the higher amount or you’ve been hit with surprise overdraft fees.
  • Cost you thousands more over the life of your loan. When you enroll in an income-driven repayment plan, you may pay less each month than the interest that accrues on your loan. This means that your loan balance can grow over time. But these plans do offer an important protection for people who recertify on time each year and continue to qualify for a lower payment— any unpaid interest does not get added to your outstanding principal balance (so you don’t have to pay additional interest on the interest) unless you choose to leave the plan. But, if you miss your deadline to recertify, you lose this benefit. For some borrowers, this can cost thousands of dollars over the life of a loan.

  • Delay the date you’re eligible for loan forgiveness (and may cause you to make unnecessary extra monthly payments). The two largest income driven plans, Income-Based Repayment (IBR) and Pay As You Earn (PAYE), feature loan forgiveness after 25 or 20 years of payments, respectively. This means that if you have high debt or low income over a long period of time, you may still have an end in sight, even if you are only making low payments. If your recertification isn’t processed on time and you need to use forbearance while your recertification is being processed, you can’t count those months toward loan forgiveness.
  • Reduce the amount of interest that the government will pay on your behalf. For borrowers with subsidized federal loans, income-driven repayment plans feature another important benefit. For three consecutive years (36 months) from the time you first sign-up, the government will waive any interest charges your monthly payment does not cover, as long as you demonstrate partial financial hardship. Because the clock on this benefit starts running immediately and won’t pause even if you don’t recertify, you are giving up a benefit every month after your payments snap back.

Next Steps

Over the next few weeks, we’re going to keep working with leaders at the Department of Education and the Department of the Treasury to figure out how to address problems like these for student loan borrowers. Check back here for more information about what we’ve learned through our public inquiry and what comes next.

If you have questions about repaying your student loans, including questions about income-driven repayment plans, check out Repay Student Debt to find out how you can tackle your student loan debt.

If you have a problem with your student loan, you can submit a complaint online or call us at (855) 411-2372.

Seth Frotman is a Deputy Assistant Director of the Consumer Financial Protection Bureau and the Acting CFPB Student Loan Ombudsman. To learn more about the CFPB’s work for students and young Americans, visit

It’s not too late to share your #studentdebtstress story


In May, we asked you to tell us your #StudentDebtStress story by July 13th. It’s not too late to share your story.

Over 40 million Americans are working to repay more than $1.2 trillion in outstanding student loan debt.

Some borrowers have already shared with us their experiences with their student loan servicer (the company that sends a bill each month). We’ve released the first batch of your stories and we encourage you to take a look at what we’re hearing from the public at

Here is some of what student loan borrowers have told us they are experiencing (click on the links below to see what a few of them have shared, in their own words):

  • Barriers to accessing benefits. You’ve shared problems related to enrolling in income-driven payment plans that ended up costing you hundreds of dollars in unexpected payments. These problems include processing delays and incorrect information from customer service personnel. We’ve also heard about barriers that prevent you from keeping your payments low under these plans, even when you’ve filled out the required paperwork.
  • Lost paperwork, customer service confusion. You’ve reported processing problems that have caused you to fall behind, including breakdowns when you try to repay a specific loan on your account or your loans are transferred between servicers.

Share your story and tell us how to make sure student loan servicing works for borrowers. Simply click this link to send us an email, which will be included in the public record. Please don’t include sensitive information like account numbers and social security numbers.

We’re accepting comments through July 13th.

We’re also calling on other stakeholders, including financial institutions, colleges, consumer advocates and policy experts to share their feedback. A full list of questions we’re asking the public is available in our Request for Information.

If you have questions about repaying your student loans, check out our Repay Student Debt feature of Paying for College to find out how you can tackle your student loan debt.

If you have a problem with your student loan, you can submit a complaint online or call us at (855) 411-2372.

Having trouble with a link in this blog post? You can also submit an official comment online.

Sound off on student loan servicing

A few weeks ago, we announced that we’re gathering information about student loan servicers — the companies responsible for collecting and processing student loan payments. Although student loans are usually thought of as a younger American issue, in reality there are an increasing number of older Americans paying back student loan debt. Many older consumers struggle with student loan debt, sometimes forcing them to delay retirement or threatening their financial security when in retirement.

Older consumers may hold student loan debt because they are still paying off loans that were:

  • accrued when they were much younger
  • acquired during the course of a mid- or late-career switch, or
  • taken out for the education of their children or grandchildren.

According to a recent Government Accountability Office report, here are some concerning trends about older consumers and student loan debt:

  • Between 2005 and 2013, outstanding federal student loan debt owed by older borrowers grew from less than $3 billion to more than $18 billion, more than a six-fold increase.
  • Delinquency rates for older borrowers doubled between 2005 and 2012, rising from 6 to 12.5 percent.
  • Older borrowers defaulted on federal loans at much higher rates than other borrowers. More than a quarter of federal loans owed by borrowers ages 65-74 are in default. For borrowers 75 years or older, more than half of outstanding federal loans are in default.
  • The number of older consumers whose social security benefits were offset for the collection of federal student loan debt increased nearly 400 percent from 2002 through 2013. For consumers 65 or older the increase was roughly 500 percent.

Many older consumers who have submitted complaints to the Bureau about student loans report being billed for loans they never borrowed, receiving harassing and abusive debt collection calls, being wrongly charged fees because of the servicer’s accounting errors, and having their credit rating impacted by incorrect reporting of student loan information.

We now want to hear from you. If you’ve had problems with student loan debt or run into repayment roadblocks, share your story. Here are just a few things you can tell us about:

  • Disclosure, accessibility, and availability of options to release a co-signer from their legal obligation to repay a co-signed student loan
  • Disclosure, accessibility, and availability of options to discharge or reduce student loan debt in the event of the death or disability of a borrower or co-signer
  • Processing, allocation, and application of loan payments
  • The imposition and disclosure of late fees
  • The complaint resolution process (including how allegations of fraud are resolved)
  • Furnishing of credit information to credit reporting agencies

To share your story for the public record, go to or click this link to send us an email. Please don’t include sensitive information like account numbers and social security numbers. Submit your input and ideas by July 13, 2015. Having trouble with a link in this blog post? You can also submit an official comment online.

If you experience any problem with a student loan, you can submit a complaint online or call us at (855) 411-2372. We’ll forward your complaint to the company and work to get a response from them.