New Jersey college students have joined thousands of other borrowers to grumble to a new federal agency about their private student loans, according to a report the New Jersey Public Interest Research Group released today.
Of the more than 4,300 borrowers nationwide who have complained to the Consumer Financial Protection Bureau about problems with these loans, about 181 were from New Jersey, the group and its parent organization, USPIRG, found after examining the agency's online complaint database.
Put another way, the Garden State has contributed about 4.3 percent of all complaints that the agency, also known as the CFPB, has heard about private student loans since it started taking complaints about the product in March 2012. That's enough to land the Garden State ninth most-likely state where borrowers complain.
Most of the complaints have been about people's inability to repay their loans or problems they face when they have trouble paying, NJPIRG authors wrote. By comparison, relatively few have said they had difficulty getting a private loan.
The private student loan market represents just a slice of the overall market, which is dominated by the federal government. Banks and other lenders extended just 7 percent of student loans last year, while private loans represent just 15 percent of the more than $1 trillion in student loans outstanding, NJPIRG said. But the group said private loans tend to be costlier and riskier than the typically subsidized, fixed-rate loans offered by the government, and they are more likely held by those with the most debt.
Of the private market, the issuer Sallie Mae originates or services about half of the private student loan market. As a result, it received more complaints than any other lender, at about 46 percent of all complaints nationwide, NJPIRG said.
In New Jersey, Sallie Mae tallied 81 complaints, or about 45 percent of the total, while the New Jersey Higher Education Student Assistance Authority netted the second-highest number of complaints, at 25 gripes.
In a few cases, borrowers have been able to get some satisfaction from their complaints. Just under 8 percent of borrowers nationwide were able to get monetary relief from their lenders after contacting the CFPB, with Sallie Mae borrowers having a slightly better experience at 12 percent, the report shows. Overall, the median relief was about $700, while the biggest amount was more than $75,000.
Twelve percent of complainants were able to get non-monetary relief. But most complaints, or about 77 percent, were "closed with an explanation," the CFPB data cited in the report show.
In a statement, a Sallie Mae spokeswoman said, "More than 90 percent of our private education loan customers are managing their payments successfully, and for those experiencing difficulty, we offer customized assistance, including current modifications on more than $1.4 billion in private education loans. We're committed to working with our regulators to continually improve our customers' experience."
The CFPB was formed out of the 2010 Dodd-Frank Act with the purpose of overseeing common financial products, such as credit cards and payday lenders, that previously haven't been as closely regulated.
Its consumer complaint database can be viewed here.
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