The CFPB is requesting comment on student loan servicing practices that are harmful to borrowers. The issues the Bureau is seeking information on include industry practices that create repayment challenges, hurdles for distressed borrowers, and the economic incentives that may affect the quality of service.
Student loans make up the nation’s second largest consumer debt market. More than 40 million student loan borrowers owe more than $1.2 trillion. According to the first quarter Household Debt and Credit Report the delinquency rate for student loans was 11.1% as of March 31, higher than the consumer delinquency rates for mortgages, credit cards, auto loans and home equity lines of credit.
The CFPB has received complaints through its Tell Your Story function regarding billing problems associated with payment posting, prepayments and partial payments. Other consumers complained about lost records, slow response times to fixing errors and a general lack of customer service. Consumer who have their loan transferred from one servicer to another report interruptions when receiving notices, billing statements or other routine communications.
Comments are due July 13, 2015.
Read the student debt stress fact sheet.