by Barbara Nevins Taylor
With $1 trillion in outstanding student loan debt, you might say it’s about time regulators got a handle on the loan industry. So it’s welcome news that the Consumer Financial Protection Bureau (CFPB) proposed a rule that will give it oversight of servicers that collect and process student loan payments for banks. These servicers also deal with delinquent loans and that’s a particular area of concern. CFPB Director Richard Cordray said, “Our rule would bring new oversight to the student loan market and help ensure that tens of millions of borrowers are not treated unfairly by their servicers.”
The CFPB found that many borrowers say as they try to repay their loans, questions to servicers often go unanswered. Many complain they can’t find out how much they owe, or even the terms of their loans. They also are often surprised by extra, unexplained fees. And some complain they get different stories about the status of their loans and repayment when they talk to different employees at the organizations. In addition, some find they get lost in telephone hell as they try to straighten out errors.
The CFPB oversight aims to protect borrowers and set clear rules for standards and practices by the servicers.
The public has 60 days to comment on the proposed rule after it’s published in the Federal Register.