Consumer Financial Protection Bureau Issues Annual Report on Student Loans
The Dodd-Frank Wall Street Reform and Consumer Protection Act established an ombudsman within the Consumer Financial Protection Bureau. Pursuant to the Act, the ombudsman prepares an annual report and makes appropriate recommendations to the Secretary of the Treasury, the Director of the Consumer Financial Protection Bureau, the Secretary of Education, and to Congress. The first annual report on student loans was issued yesterday and for those of us who follow the industry closely and who listen to frustrated student loan borrowers across the country, the major findings were not too surprising.
Among the most common complaints from private student loan borrowers (March - Sept. 2012):
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Inability to speak with personnel empowered to negotiate a repayment plan
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Inability to refinance
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Inability to access repayment plans previously advertised
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"Good faith" partial payments leading to default
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Bankruptcy-triggered def aults
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Unexpected checking account transactions
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Poor handling of payments
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Confusion as to when loans and loan-servicing rights were bought and sold
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Poor crediting of overpayments (applying them to future minimum payments in lieu of paying down principal)
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Limited access to account information
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Conflicting instructions and answers from loan servicers (different answers from different employees at the same company)
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Difficulty enrolling in incentives
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And many others...
Bottom line - As Heather has often said, private student loans are riskier and often more costly than their federal counterparts. They offer fewer borrower protections and often are less flexible in repayment than federal student loans. For more on how Heather sees the private student loan options for borrowers, see the links below. To read yesterday's annual report from the CFPB, read on.
http://askheatherjarvis.com/blog/an-easier-way-to-get-your-private-student-loan-problem-fixed
http://askheatherjarvis.com/blog/friends-dont-let-friends-borrow-private-student-loans
http://askheatherjarvis.com/blog/heather-disses-private-student-loans-all-official-like
JDJ
