Student Debt Debacles

New York Times
October 25, 2012
P. A24

Student loans obtained through private lenders are not set up the same as federal loans. Most government student loans carry interest of about 6.8 percent or below and feature consumer protections that allow borrowers who lose their jobs to make lower, affordable payments or to defer payment for a period of time. Private student loans, by contrast, usually have variable interest rates and fewer protections. Private loans now represent $150 billion of the $1 trillion in total outstanding U.S. student loan debt, the Consumer Financial Protection Bureau (CFPB) reports. Many loan servicers make it difficult for borrowers to find out exactly how much they owe, obtain their payment histories, or get their loan modified. Sometimes, borrowers making late or partial payments have had money withdrawn from their checking accounts without their permission, triggering overdrafts. The New York Times editorial staff recommends that the federal government offer refinancing and debt relief opportunities for struggling student borrowers, as the government did for some mortgage holders. They also say the CFPB should set national standards for loan servicers regarding disclosure of conditions.
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