CFPB Looking at Private Student Loans

The complaint list being collected by the Consumer Financial Protection Bureau (CFPB) is growing.  The list includes mortgage lenders, bank credit cards, payday lenders, credit bureaus, debt collectors, overdraft fees, checking, savings, and CDs. The latest is student loans.  The priorities regarding private student loans are to simplify the terms, clarify the choices, and eliminate the fine print so they know the important terms.

Student loans

Since student loans have surpassed credit card debt, which is now at $1 trillion, there is major concern over the stability of this market.  Federal student loans have more controls than private student loans.  Private loans have more penalties and higher interest rates and very little federal controls.  The Consumer Financial Protection Bureau sent letters to over 6,000 universities notifying students and alumni that they can get help with these loans through their complaint system. This includes those who borrowed money to finance their education, had difficulties in taking out private loans, repaying the debt, or managing loans that have gone into default. The bureau expects complaints concerning problems making full payments, confusion or misleading advertising or marketing of private student loans, billing disputes, issues around deferment, and debt collection.

To educate students about student loans and repayment terms, the bureau has an interactive web tool called the “Student Debt Repayment Assistant”, which tens of thousands of students have used already.  The Consumer Financial Protection Bureau has drafted a financial aid shopping sheet that will be given to students and their families. The Department of Education is working with the bureau to finalize it.  In addition, the bureau is conducting a study for Congress on private student loans.

Complaints

The complaint system has received many complaints.  From July 2011 through February 2012, they have received more than 22,000 complaints – almost 12,000 on credit cards and nearly 7,000 about mortgages.  The bureau works with financial institutions to resolve the complaints.  The financial institutions are to respond within 15 days and resolve the issue within 60 days. Consumers receive a tracking number to check the complaint status. This will work the same way for private student lenders.

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Debt, Government, Money & Identity

This post was written by John Ulzheimer