Student Loans

This post is part of a series for National Consumer Protection Week

Americans owe more than a trillion dollars in student loan debt. That’s more than we owe on credit cards, more than we owe on car loans – and it’s still growing.

So, if you’re going to invest in a college degree, we want you to be able to choose the best deal for your situation. Students are overwhelmed with options and aren’t sure how to compare them. In the absence of apples-to-apples comparisons, they’re left to their own devices when making a choice that will have significant consequences for their financial future.

Here is the suite of tools we’ve developed to help you along the way:

Paying for College
From start to finish, we can help you make informed financial decisions about paying for college.

Repay student debt
While we can’t give you advice for your exact situation, we can point you in the right direction.

Choose a loan
Three steps that can help you get the right loan for you.

Submit a complaint about a student loan or a bank account or service
We’ll forward your issue to the company, give you a tracking number, and keep you updated on the status of your complaint. Even if you have federal loans, we can help make sure you get to the right place to submit a complaint.

Managing your college money
Choosing your first bank account is an important decision. Unlike that first school ID photo, your first banking relationship could last long after you graduate. Making a smart decision now will mean fewer surprise fees that can add up later.

Compare financial aid and college cost
We’re building a tool that will let you compare financial aid offers so you can see how all those numbers impact your payments down the road.

This post is part of a series for National Consumer Protection Week

We began taking credit card complaints in July 2011, and we now can help with complaints about mortgages, bank accounts and services, student loans, vehicle and other consumer loans, and credit reporting.

How do I submit a complaint?
Submitting a complaint and tracking your status is simple and secure. The fastest way to get started is to go consumerfinance.gov/Complaint. If you need help while you’re online, you can chat with one of our team members on the site.

You can also submit a complaint over the phone by calling us at (855) 411-CFPB (2372), toll free. Our U.S.-based call centers can help you in over 180 languages, and can also take calls from consumers who are deaf, have hearing loss, or have speech disabilities.

What makes an effective complaint?
The best complaints are the ones that explain, clearly and concisely:

• What happened, including key details and documents,
• What you think would be a fair resolution, and
• What you’ve done to try and resolve it.

What happens after I submit?
After you’ve submitted your complaint you can check its status at consumerfinance.gov/Complaint or by calling us at (855) 411-CFPB (2372). We’ll also send you email updates along the way so you know where you are in the process, and what’s next.

After the company responds to your complaint, we’ll email you, and you can log back in to review the response and give us any feedback.

Every complaint helps us in our work to supervise companies, enforce federal consumer financial laws, and write better rules and regulations. You speaking up gives us important insight into the issues you face as a consumer, so thank you!

Learn more about submitting a complaint: consumerfinance.gov/Complaint

Many communities face shortages of teachers in areas of critical need, including science and math. These teacher shortages are felt most acutely in rural and urban communities. For students in these schools, great teachers can be the key to future success.

Training highly-qualified teachers requires higher education, including, for many, the pursuit of an advanced degree. And for these teachers and those aspiring to join their ranks, student debt remains an obstacle.

Recently, the CFPB has heard from teachers and other education professionals about the impact of rising student debt on schools, educators and the communities they serve. Here are some of the questions that we’re trying to answer.

Does student debt dissuade Americans from becoming teachers?

The National Center for Education Statistics estimates that the United States will need over 425,000 new teachers by the end of this decade to make up for the wave of retiring baby boomers. Despite this challenge, compensation for public school teachers has not kept pace with the private sector— according to one study, starting public school teachers in 19 states earn less than $33,000 per year.

As starting salaries stagnate and student debt grows, student loan payments will consume an increasing share of new teachers’ discretionary income. This combination of low starting salary and rising student debt ensures that new teachers must perform a tenuous high-wire act in order to achieve the sort of middle-class security attained by previous generations.

Does student debt contribute to high turnover for new teachers?

When adjusting for inflation, average total student loan debt has increased by 49% over the past decade. Rising student debt is squeezing young teachers and this may be causing them to quit teaching. The share of public school teachers leaving the profession each year has increased by 50% since 1992. And newer teachers are more than twice as likely to leave teaching as those that have taught for more than 10 years.

Recent cuts to state and local budgets have accelerated this trend—there are now over 300,000 fewer teachers than there were in 2008. Students pay the price through rising class sizes and high attrition—student debt may be leaving a legacy of diminished performance in schools across the country.

For many teachers, career advancement is tied to obtaining an advanced degree that they must finance on their own, leading to more debt. Is student debt contributing to shortages of highly-qualified math and science teachers?

In order to compete in a global economy, we must ensure that our schools are able to equip the next generation of students with the knowledge and skills that the job market demands. In the past decade, we’ve faced a growing shortage of highly-qualified math and science teachers.

Rural and urban school districts face particularly severe shortages—in effect, the communities with the most urgent need for great teachers tend to be the school districts with the fewest. And teachers in rural districts generally earn less than their peers—the starting salary for rural teachers is lower than the starting salary for non-rural teacher in 39 states.

For highly-qualified teachers interested in pursuing careers in underserved communities, student debt may act as another deterrent. Three-quarters of new teachers with master’s degrees borrowed to finance their education. These teachers carry an average of more than $35,000 in student debt—in many cases total borrowing may exceed starting salary, ensuring the best qualified teachers must bear the greatest burden.

What role do loan repayment and loan forgiveness programs play in teacher recruitment and retention?

There are a number of existing loan repayment and forgiveness programs designed to encourage college graduates to pursue careers in teaching. Some programs may be available to all borrowers with federal student loans and others may be contingent upon teaching in a particular state or community. The largest and best-publicized programs are administered by the U.S. Department of Education, but individual states and municipalities may offer benefits to recruit and retain new teachers.

We’ve heard that this patchwork of benefits may be confusing for new teachers and it may be in school districts’ interests to help new employees navigate these options. In the context of teachers’ growing student debt, forgiveness and repayment programs may offer a path forward for underserved communities that cannot afford to compete for new teachers based on compensation alone.

As we seek to understand how consumer financial products work, we look forward to learning more from others about the impact of student debt on our society.

Today, we announced that we’re gathering information to come up with a plan to address the challenges many struggling borrowers face to find a more affordable payment plan on their private student loans. We need your ideas and help to stem the tide of trouble for many student loan borrowers.

Student loans are a critical part of the consumer finance marketplace — a way for millions of Americans to attend college and climb the economic ladder. But rising balances and distress in the student loan market raise questions about the domino effect on the rest of the economy and society. Will young consumers with large amounts of student loan debt be able to start small businesses and buy homes like generations before them?

Policy makers and financial institutions have taken steps to ensure that lending is safer. Many loans of all types made in years leading up to the financial crisis would likely not be made today. But those already stuck with heavy debt burdens and looking for some way to pay it back, want to know: what about us?

Most of the student loan market consists of federal student loans, which allow most borrowers to avoid default through the income-based repayment options in times of hardship. But private student loans – a market which boomed in the years leading up to the financial crisis – generally don’t.

Over the last year, we’ve heard from thousands of private student loan borrowers willing to make good on their debts but seeking a more affordable payment, especially when navigating tough times. One of the top complaints we’ve heard from private student loan borrowers was the inability to refinance or negotiate an alternative repayment plan with their lender or servicer.

This is a familiar story. Since the financial crisis, millions of homeowners have sought more affordable mortgage payments by refinancing and locking in rates at historically low levels. Others pursued loan modifications to avoid foreclosure with mixed success. But for many private student loan borrowers, finding a more affordable payment has been a frustrating experience.

We also hear from lenders, who want customers to be successful and ultimately repay their loans. That’s why we’re looking to put together some creative solutions to find private student loan repayment plans that borrowers can actually afford.

We need your input to help student loan borrowers experiencing distress and default. Learn more about this project and how you can contribute ideas. We want to hear from borrowers, lenders, schools, and everyone with a stake in the success of this market by April 8th.

In the coming months, we’ll release your input and our ideas on how to address this piece of the student debt puzzle. Stay tuned.

Rohit Chopra is the CFPB’s student loan ombudsman.

We need your input to help student loan borrowers experiencing distress and default. Learn more about this project and how you can contribute ideas. We want to hear from borrowers, lenders, schools, and everyone with a stake in the success of this market by April 8th.

Last year, Federal Reserve Chairman Ben Bernanke testified before Congress that his son is on track to rack up $400,000 in medical school debt. To put this in perspective, that is more than double the national median home price.

Training America’s doctors, dentists, nurses, and other health professionals isn’t just limited to higher education. For example, doctors generally pursue residency training for multiple years after school before practicing on their own.

Recently, the CFPB heard from members of the health professional community about how they’re managing student debt. Here are some of the questions that we’re trying to answer.

Does student debt play a role in the shortage of primary care practitioners?

Primary care providers are the principal healthcare professionals responsible for patient care within our healthcare system—these are the family doctors, internists, pediatricians, nurse practitioners and others responsible for day-to-day management of our health and for the coordination with and referral to specialists. Primary care providers treat us when we’re sick, but, more importantly, they help keep us well.

The United States faces a major shortage of primary care providers—and this shortage is expected to continue to grow into the next decade. Population growth and aging will drive the demand for increased primary care and recent estimates suggest that we will need as many as 52,000 additional primary care physicians by 2025.

But the share of new physicians working in primary care is declining. Primary care physicians often earn less than their peers pursuing medical and surgical specialties. Medical school graduates have identified student debt as a driver of their specialty selection.

For medical school graduates from middle-class families, student debt has been found to be a statistically significant determinant of specialty choice—student debt might cause medical students from middle class families to choose not to become primary care providers.

Is student debt limiting the ability of health professionals to start their own practices?

Many of us went to a local doctor in the community who had his or her own practice. To start a practice, health professionals need to take out a loan which they must personally back. But with high student loan payments, they may not qualify for these loans.

The average medical school graduate who borrows takes on more than $150,000 in student loans. Recent research suggests that over the past five years, graduates with six-figure debt are increasingly treated as high-risk applicants when seeking credit—this may be impacting access to personally-guaranteed small business loans to establish private medical practices.

Does student debt limit the ability of health professionals to practice in rural areas?

More than 20 million Americans live in rural communities that have a shortage of the healthcare providers required to meet their basic health care needs. Many primary care physicians in rural areas earn less than their counterparts practicing in major metropolitan areas.

For underserved rural communities, recent research suggests growing levels of student debt may be pushing newly-graduated professionals away—leaving these communities without adequate access to care.

As we seek to understand how consumer financial products work, we look forward to learning more from others about the impact of student debt on our society.

 

Note: This post was updated at 5:45pm on March 11, 2013.

Americans owe more than a trillion dollars in student loan debt. That’s more than we owe on credit cards, more than we owe on car loans – and it’s still growing.

So, if you’re going to invest in a college degree, we want you to choose the best deal for your situation. Here at the CFPB we’ve been doing extensive research these last few months. We talked with students and sat down with high school guidance counselors to find out how students make choices about how to pay for college.

We found some recurring themes: Students are overwhelmed with options and aren’t sure how to compare them. In the absence of apples-to-apples comparisons, they’re left to their own devices when making a choice that will have significant consequences for their financial future.

So, what to do about it?

We interviewed financial experts, lenders, policy wonks, and thousands of people like you. You tried our pilots and gave us great feedback – including the fact that this stuff is not easy to figure out — and we heard you.

We’ve distilled the things students said they wish they had known, what experts recommend, and what our pilots have told us could save you money into a set of tools to help you navigate the noise, and to support you every step of the way.

Highlights include:

Choosing a loan

We answer the questions we heard over and over from students trying to figure out how to choose, and offer three steps that can help you get the right loan for you.

Comparing financial aid

When student aid offer letters start arriving from colleges in the spring, you’ll be able to use this tool to make an apples-to-apples comparison between options. A previous pilot of this tool included more automated data, but it didn’t always reflect individual situations accurately. We’re hoping it works better with your personalized offers in hand.

Managing your college money

You’re not going to get the best deal if choosing your first bank account is sandwiched between your first week of classes and your first collegiate meal of instant ramen. This guide will help you plan to get settled financially before you even get to campus.

Repaying student debt

You’ll get a personalized recommendation based on every repayment scenario, whether you’re active-duty military, behind on your loans, working at a non-profit, all of the above, none of the above, or something else entirely.

Real talk

This set of tools is in beta. Which means the tools can only get better from here. But they can only get better if you tell us: Are there parts of this that are hard to use? Did you find jargon you don’t understand? Or, did you find something you’d never heard of before? Did we miss something? Would this help you know what to tell your kid sister about paying for college if she was just starting to look at schools? Let us know!