About 30 percent of federal student loan borrowers say they’ve gone without food, medicine, or other necessities because of their monthly bills.
Student loan borrowers
That finding comes from a new survey by the Consumer Financial Protection Bureau, conducted between October 2023 and January 2024, and including more than 3,000 responses from people with an active or recently active student loan account.
The CFPB wanted to know how millions of people with education debt were doing when their bills resumed in September 2023 after the covid-era pause on the payments expired.
In addition to skipping necessities, 38 percent of borrowers said they carried credit card debt they wouldn’t have otherwise, the CFPB found. About 44 percent of borrowers said their education debt delayed when they could by a home, and 26 percent said the debt pushed back when they’d start a family.
The report also found nearly 61 percent of borrowers who received debt relief reported positive life changes. In addition, nearly 42 percent of federal student loan borrowers have only ever used the standard repayment plan, with many unaware of alternative options that could help lower their payments.
“Our survey reveals that student loan debt relief has been a lifeline for many borrowers, allowing them to make positive changes in their lives,” CFPB Director Rohit Chopra said in a statement. “However, it’s clear that many borrowers are struggling with repayment, and there is more work to be done to ensure repayment options are accessible and effective.”
Failures by student loan servicers
Another report by the CFPB found that student borrowers are being harmed from servicing failures and program disruptions.
Student loan servicing breakdowns, including inaccurate information, improperly processed payments, and delayed applications, have stymied the return of borrowers to repayment, the annual report by the CFPB’s student loan ombudsman shows.
That’s despite millions of borrowers getting relief through new income-driven repayment plans, cancellation programs, and automatic payments.
“Our analysis of over 18,000 consumer complaints shows that servicer errors with billing, customer service failures, and incorrect repayment information are causing severe financial and personal distress to borrowers,” CFPB Student Loan Ombudsman Julia Barnard said in a statement.
The complaints, submitted during the last award year from July 1, 2023 to June 30, 2024, are the highest the CFPB has received since it began collecting these complaints in March 2012.
Many of the servicer failures are persistent problems including errors with billing and auto pay, servicers providing incorrect information about accounts and repayment options, and months-long delays in the processing of income-driven repayment applications, Barnard said.
During the past year, 28 million federal student loan borrowers returned to making payments after the end of the covid-19 payment pause. To help struggling borrowers, the Department of Education adopted reforms resulting in billions of dollars in loan cancellation for almost 5 million borrowers and restored eligibility for 3 million who had been in default.
However, servicing failures and legal challenges have hampered loan relief efforts, such as the Saving on a Valuable Education or SAVE plan, from being carried out, he said.
Consumers can submit complaints about financial products or services by visiting the CFPB’s website or by calling 855-411-2372.
