States Asked to Discuss Private Student-Loan Complaints
The Consumer Financial Protection Bureau is asking state attorneys general, schools and advocacy groups to share information about complaints over private student loans.
The federal agency has been collecting information about private student loans, which don’t have the same protections as federal loans such as deferment and income-based repayment. It published almost 2,000 complaints today on its website from borrowers, many telling tales of hardship after amassing $100,000 in debt.
“One theme clearly rose to the top,” wrote Rohit Chopra, the CFPB’s student-loan ombudsman. “Many private student-loan borrowers expressed confusion and frustration when paying back their loans, especially when trying to get on an affordable payment plan.”
Unlike the federal student-loan program, which lets consumers borrow at fixed rates directly from the government, the loans from at least 30 banks and other private lenders feature mostly variable rates that can be more than twice what some people pay in the federal program.
The CFPB was created by the 2010 Dodd-Frank Act to help consumers understand financial products including student loans, mortgages and credit cards. Earlier this year, the agency estimated that outstanding educational debt is about $1 trillion.
The bureau is expected to issue a private loan report, mandated by Dodd-Frank, next month.
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