This morning, CFPB Director Richard Cordray, Education Secretary Arne Duncan, and Acting Deputy Treasury Secretary Mary Miller convened a meeting with the nation’s largest private student lenders and servicers who work with millions of borrowers and their families.
Unfortunately, too many student loan borrowers are struggling. According to a report we published jointly with the Department of Education, there were more than 850,000 private student loans in default, with even more in delinquency.
Unlike federal student loans, private student loans generally lack flexible repayment options when borrowers run into trouble.
We’ve received thousands of complaints from private student loan borrowers. The most common complaint comes from those who are unable to negotiate a repayment plan that they can actually afford. Many of you have told us that you want to pay back your loan, but you just need a payment plan that works for you, especially when you haven’t yet found a full-time job in a tough market.
Many of the financial institutions represented in today’s meeting received extraordinary assistance from federal government programs when they faced their own financial distress. We were very encouraged to hear that many of them are launching initiatives this year to help their customers weather the storm and get back on their feet.
In the meantime, we’ll keep working to help you find a way to make ends meet. To learn more about your options when repaying private and federal student loans, check out Repay Student Debt. Still need help resolving a student loan issue? Submit a complaint.
Borrowers need more options to avoid default, which is in the best interest of borrowers, financial institutions, and the economy more broadly. We’ll be monitoring this market closely to determine whether or not financial institutions are making progress.
Rohit Chopra is the CFPB’s Student Loan Ombudsman.
Updated at 1:55 p.m.to reflect that Ms. Miller attended on behalf of Treasury Secretary Jacob Lew.