Partners Respond to CFPB Report on Private Student Loan Complaints
Today, the Consumer Financial Protection Bureau (CFPB) Student Loan Ombudsman released a report highlighting complaints from struggling student-loan borrowers who have been driven into default. While federal student loans have a number of loan modification options to help borrowers avoid default, private student loan servicers and lenders may not make it easy for borrowers to get help in times of distress, which may have consequences for not only an individual’s financial future, but also for the broader economy.
Check out what our partner organizations are saying about the CFPB report.
Center for American Progress
David Bergeron, Vice President for Postsecondary Education at the Center for American Progress, released the following statement. Bergeron also testified before the Senate Banking Committee on student loans in July.
- At a time when millions of student-loan borrowers are struggling to repay their loans, it is very disturbing to learn how little lenders are doing to help them. This report from the Consumer Financial Protection Bureau makes clear that the federal government needs to be doing more to protect private student-loan borrowers. Private student loans typically charge higher, often risk-adjusted interest rates; require co-signers; and lack many of the consumer protections that are standard in federal student loans. If private lenders won’t help, the federal government needs to step in and offer borrowers the ability to refinance their private loans with federal student loans that have better repayment options and lower interest rates.
Suzanne Martindale, staff attorney for Consumers Union. Read the full statement.
- This report makes it brutally clear how tough and inflexible the terms for private student loans can be. More flexible payment plans and better information upfront would help people navigate this incredibly complicated system and get out from under these crippling debts.
Pamela Banks, senior policy counsel for Consumers Union. Read the full statement.
- The findings underscore how badly we need lawmakers and regulators to provide stronger consumer protections for private student loan borrowers. Students need to be aware of all of their options for financing their education, including federal loans that may be cheaper and safer.
- It’s deeply concerning to hear private student-loan borrowers are being driven into default. Student-loan borrowers should have clear and easily attainable information regarding their private loans and repayment options.
There’s more private lending companies can and should do to help struggling borrowers, including making information more readily available. Students should be eligible for loan modifications, and private student-loan borrowers should not be backed into temporary fixes as a result. Congress has a role to play too. From expanding bankruptcy protections to allowing borrowers to refinance their student loans, more needs to be done to help borrowers.
Higher Ed, Not Debt
Campaign Manager Maggie Thompson on the Consumer Financial Protection Bureau’s report on private loan consumer complaints:
- Private lenders are not doing enough to protect student loan borrowers or to give borrowers clear and sufficient options to stay out of default. The dramatic increase in complaints over the last year shows that the crisis for student loan borrowers is growing and private lenders must act.
With more than 7 million borrowers currently in default, the report shows this a crisis that affects the greater American economy. Private loan servicers must have better options available to help borrowers avoid default.
One Wisconsin Now
Executive Director Scot Ross on the Consumer Financial Protection Bureau’s report on private loan consumer complaints. Read the full statement on their website.
- Student loan borrowers have done the right thing—they worked hard to get their education and took on the personal responsibility to pay for it. They’ve earned a fair shot at the middle class but instead the system is saddling them with decades worth of debt.
This report is yet another reminder of the dire need for common sense reform to restore borrowers consumer protections and allow them refinance their student loan, just like you can with a mortgage or auto loan.
That’s why we’ve continued to support the groundbreaking state-based Wisconsin “Higher Ed, Lower Debt” reforms for the state’s nearly 1 million student loan borrowers.
Student Debt Crisis
Executive Director Natalia Abrams on the Consumer Financial Protection Bureau’s report on private loan consumer complaints. Read the full statement.
- We applaud the Consumer Financial Protection Bureau (CFPB) for their recent report which outlines the struggles faced by private student loan borrowers. Their main finding being, there are little to no protections or loan modification options for those who hold private student loans; while Federal student loans have a variety of repayment options that are defined by law. In fact, there was a 38% increase in borrower complaints in the last year, most of which were directed at this problem. We are grateful that the CFPB is on the side of student loan borrowers, and we will continue to support them on their mission.
Learn more about where to file a complaint about your loan provider on the CFPB website.