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Wednesday, September 30, 2015

CFPB: Student Loan Borrowers Report Widespread Servicer Failures

The CFPB released a report detailing widespread servicing failures reported by both federal and private student loan borrowers. Consumers report problems such as servicers losing paperwork or misapplying payments, difficulty correcting problems and issues with accessing affordable repayment alternatives to avoid default.

The CFPB, the U.S. Department of the Treasury and the U.S. Department of Education released recommendations for policymakers and market participants to improve borrower outcome and reduce default:

  • Create consistent, industry-wide standards for the entire servicing market;
  • Hold servicers accountable;
  • Provide borrowers with access to clear and timely information; and
  • Improve publicly available data.

Student loans are the second largest consumer debt category in the U.S., growing rapidly in the last decade. The total volume of student loans has more than doubled, rising from less than $600 billion in 2006 to more than $1.2 trillion today. One in four student loan borrowers are currently in default or struggling to stay current on their loans.

Read more.

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