WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) released its annual Student Loan Ombudsman Report. Over the past year, the Bureau received nearly 23,000 complaints involving private student loans, federal student loan servicing and related debt collections.
Additionally, the report recounts in detail how borrowers of all ages are experiencing difficulties accessing consumer protections authorized by existing laws and regulation.
In response to the report, Whitney Barkley-Denney, a policy counsel and student loan specialist with the Center for Responsible Lending made the following statement:
It is disturbing to learn that over the past year, more than half of all student loan complaints received by the CFPB were about issues with federal student loan servicing. When 56 percent of consumers filing complaints filed last year are frustrated by an inability to access options such as income-driven repayment (IDR), these new findings help to explain why so many borrowers are in default.
Just as there were mortgage borrowers who unnecessarily went into foreclosure during the housing crisis, there are now borrowers who are unnecessarily defaulting on student loans when alternative exist to protect their payment affordability and their credit ratings. These unnecessary defaults, in many cases, contribute to the 2,300 debt collection complaints involving student loans.
Something is wrong when in a single year, there are more complaints about taxpayer-funded loans than there are about private ones. This finding reveals how the ill-advised recent revocation of an information sharing agreement by the Department of Education with the CFPB is really hurting borrowers. As this report suggests, there should be more oversight of Department loans and servicing, not less. This includes oversight from independent agencies like the CFPB and state regulators.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Charlene Crowell at firstname.lastname@example.org