Photo (cc) by ºNit Soto
Lately the CFPB seems to be saying “I’ve got your back” to college kids. Last month it began investigating how banks market to the group, and now it wants oversight of major private student lenders, according to the Associated Press.
You can read CFPB director Richard Cordray’s full statement here, but here’s the gist…
Managing debt can be complicated for borrowers – especially for those who encounter problems with their loan servicers. Loan servicers are responsible for collecting payments from borrowers on behalf of loan holders. A servicer is often different than the lender itself, and a borrower has no control or choice over which company services a loan. We have heard complaints from private student loan borrowers that nobody holds servicers accountable for answering their questions and providing quality customer service. So students can find themselves at a dead end – stuck without a clear path forward.
If you’ve had student loans, you can probably relate. My own have been passed around between three or four different servicers. At one point, I was making simultaneous payments to three different groups, even though I’d only signed up with one. It’s a nightmare to keep up with even if you’re organized and even if nobody loses paperwork or provides poor customer service.
The CFPB’s goal is to ensure fairness and keep delinquency rates down. To do that, they want to watch over the seven biggest nonbank student loan collection companies, which handle the student loans of more than 49 million people.
Consumer complaints aside, the agency is worried that student debt may ultimately hurt the health care industry, keeping med student graduates from starting their own practices and pushing the ones who would otherwise become physicians to go into higher-paying specialty fields instead.