In a surprising turnabout, the Department of Education lifted its ban on sharing its ranking information with borrowers about lenders of federal student loan money.
The data is collected from respondents to a survey who are mostly comprised of borrowers, school personnel and employees of the education department. The news is good for consumers, but may be bad news for some student loan lenders, as the numbers aren’t overwhelmingly supportive of the student loan financiers.
The bad news is that none of the four student loan companies ranked above 83 percent by borrowers, school staffers or federal personnel. Most scores hovered in the low 70s on the most recent report for the quarter ending Sept. 30, 2013. Those figures could be much worse, but still show a significant amount of dissatisfaction among consumers with loans most will carry for a very long time.
SLM Corp., better known as Sallie Mae, is among the most widely used lenders for student loans and finished last in the ratings by borrowers and school staffers, with approval ratings of 73 and 74 percent, respectively. The lending giant has faced lawsuits from borrowers, states attorneys general and others over the years, and in 2012, had to pay a $24 million settlement for violating the Telephone Consumer Protection Act while attempting to collect debts owed by its customers, so getting lower rankings than its peers may not come as a surprise to many people.
Great Lakes lending scored the highest by borrowers, topping out at 76.67 percent. FedLoan Servicing (PHEAA) trailed slightly with 74.33 percent among consumers, and Nelnet followed at 75 percent.
Some industry insiders have long been able to access the data collected by the department, such as Wall Street decision makers. The data is used for a variety of tracking purposes, and by borrower advocate groups to inform consumers. While the data has been widely used in the past, the department has kept the information confidential since August of last year, claiming a need for private assessment of the lending activity.
The move left borrowers in the dark if they wanted to seek out the reputation of each lender in a time when consumers expect to be able to quickly find reviews on companies at the tip of their fingers — quite literally — by browsing the Internet on websites like Yelp and Google.
Advocates for students and borrowers put pressure on the department to reverse the decision. Deanne Loonin, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, wrote a letter to department officials and expressed concerns that, because borrowers have to select a lender, the information about rankings, “while imperfect,” helps give consumers some background on the companies before selecting a lender. “This is particularly critical since once they make a choice, as far as we know, the department will not let borrowers switch to a different servicer,” Loonin wrote.
The department hasn’t stated when the rankings for the final quarter of 2013 will be released. In fact, there was a bit of confusion about when the latest numbers would be released. Earlier, Chris Greene, a spokesperson for the Department of Education, said the scores would be made public in April or May, so many were surprised when the figures came out this week. “I guess they were ready earlier than we originally anticipated,” Greene told reporters.