The Consumer Financial Protection Bureau (CFPB) has released a report outlining the widespread servicing failures reported by both federal and private student loan borrowers. Consumers claim loan servicers’ incompetent practices create obstacles to repayment, raise costs, cause distress, and contribute to borrowers going into default.
Student loans make up the nation’s second largest consumer debt market, which has grown rapidly in the last decade. The total volume of outstanding student loans has more than doubled, increasing to more than $1.2 trillion today. One in four student loan borrowers are currently in default or struggling to stay current on their loans, despite the availability of income-driven repayment options for the majority of borrowers.
Loan servicers are a critical link between borrowers and lenders. They manage borrowers’ accounts, process monthly payments, and communicate directly with borrowers. When facing unemployment or other financial hardship, borrowers must contact student loan servicers to enroll in alternative repayment plans, obtain deferments or forbearances, or request a modification of loan terms. Consumers have reported problems with servicers, such as them losing paperwork and misapplying payments. Borrowers claim that when errors like this arise, it’s difficult to have them corrected.
The Bureau has made it its mission to take action against these student loan servicing companies that are engaging in illegal practices. To address these harmful servicing practices, The Joint Statement of Principles includes the following recommendations:
- Create consistent, industry-wide standards for the entire servicing market.
- Hold servicers accountable.
- Provide access to clear, timely information.
- Improve publicly available data.
For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Related Resources:
http://files.consumerfinance.gov/f/201509_cfpb_student-loan-servicing-report.pdf
