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.
Read the rest of Director Cordray’s remarks.