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Our proposed rule on student loan servicers

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In case you missed it, yesterday Director Cordray announced our proposed rule on student loan servicers.

As so many families are all too aware, the cost of higher education has been steadily rising in recent years. As a result of these rising costs, more consumers need loans in order to afford college. By the end of last year, outstanding student loan debt was more than $1 trillion.

Managing that debt can be complicated for borrowers – especially for those who encounter problems with their loan servicers. Loan servicers are responsible for collecting payments from borrowers on behalf of loan holders. A servicer is often different than the lender itself, and a borrower has no control or choice over which company services a loan. We have heard complaints from private student loan borrowers that nobody holds servicers accountable for answering their questions and providing quality customer service. So students can find themselves at a dead end – stuck without a clear path forward.

The decision to take out student loans may be the first major financial decision for many of these borrowers. We do not want to see their college degrees become more burden than blessing. But many students are saddled with debt and may believe they have few options to make their debt more manageable and affordable. With the challenges they face in the current economic environment, they can be precluded or delayed in pursuing other financial opportunities like getting a mortgage or saving for retirement. Given the rapid growth of this market and the recent rise of delinquency rates, it is important to ensure that borrowers receive appropriate attention from their servicers.

Today we are proposing a rule that would allow the Consumer Bureau to supervise nonbank student loan servicers for compliance with federal consumer financial laws.

Read the rest of Director Cordray’s remarks.

  • Ed Ferreira

    I totally support this initiative. It is imperative that this rule go into effect. Thank you for taking this very responsible action. It is long overdue.

  • lcortez

    This certainly demonstrates CFPB’s focus on providing clear regulation and guidance. Your efforts should be commended and are greatly appreciated.

  • http://www.facebook.com/kaya.logan.5 Kaya Logan

    #TooLateAlreadyScrewed

  • Roark

    Emphatically Yes! Please pursue this legislation until it is passed. I have sadly often remarked to colleagues and family of late that I would have gotten better rates and customer service from a mob backed bookie as opposed to Sallie Mae. I would also love to see some legislation requiring or at least allowing student loans to be consolidated, as it is I have 14 different small loans to manage with 4 different servicers, why has it become such a nightmare to receive higher education in this country?

  • Bob A.

    Stay out and reduce your staff to reduce the size of the US government! There are already too many government regulations and too many government employees. There no need for you to expand and waste more of my tax dollars. What you should do is stop encouraging inept students to waste their money on a college education that goes no place and start encouraging the to train in vocation that leads to profitable and productive employment.

  • Reverend William Robert Alexan

    Student Loan agencies like EdFinancial placed a disputed name into my credit profile. Now, my Senate representative use a name EdFinancil “made up” to attach to my social security number and credit report. Adding to the torment is the fact have spent 13 years seeking removal of the negative information emanating from an alleged “student loan”. My sole income is a disability pension. I need to obtain a wheelchair accessible home and caregiver instead of an assisted living center. I am suffering from Charcot Marie Tooth Joint disorder. EdFinancial false student loan information on my credit profile continues to deny me access to an accessible home. I do not want to use medicare for an assistant iving center. DOE ignores its own policy guidelines. I am being forced to find an Pro Bono disability rights attorney to investigate this long term battle. No nurse or doctor at EdFinancial seem to understand the painfulness of my form of CMT. All regulated historical documents sent to validate my identity and health status satisfy policy, rule and law and that request supporting documentation, are ignored. It is emblematic now the Director and The Consumer Bureau receive the authority and responsibility of mediating and quantifying student loans servicers. No agency should have the absolute power to invent accounts without sharing the documents it used to do so. No agency should be able to avoid ADA inquiries now occurring with EdFinancial Servicing.

  • http://www.militarymoneymanual.com/ Military Money Manual

    I think this is an excellent step in the right direction. I haven’t had any issues yet with my lender or loan servicer, but I can imagine the nightmare that would ensue if I did. My wife and I have worked diligently to pay off over $100,000 of student loans in the past 3 years. We’ll be debt free by the end of 2015 if all goes according to plan!

  • Samir

    I think this is a great idea because I have found that the servicers of our subsidized student loans (ACS, Sallie Mae) provide terrible customer service on the phone, and issue financial statements that are very hard to read. One example is how difficult it is to determine how much of your balance is interest vs principal, and when it is accruing. This is particularly important because our loan is on deferral right now. When I go to the website, and the balances have gone up, it is so hard to determine when and how this interest was calculated. In contrast, when I check my mortgage, it is so easy to see where those came from (granted, I make every payment). When I try to call these folks, they don’t speak English real well and it’s hard to get an answer. So I would welcome greater oversight of these companies.

  • Mrs Maria Benson

    I am Mrs Maria Benson by name,i live in Uganda,i have two children a boy and a girl.When i was trying to get a loan to arrange my life and to start a business i was scammed 3times by different fake lenders in different countries and in this process i lost a lot of money,i have no hope anymore in life.Until God Almighty finally sent a messiah to me who helped me to clear all my financial mess and distress,he is a God fearing legitimate lender,i saw your email address on the financial basic site and really felt that you need some little advise and direction,so i decided to help you so that you can be happy the way i am today with my family.You can email him by this email address:(katherineloanfirm@gmail.com)It just an advise from me and God bless you.

  • http://twitter.com/pickledbeatnik pickledbeatnik

    Yes, yes, a thousand times yes!!!

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