WASHINGTON (Legal Newsline) — The Consumer Financial Protection Bureau (CFPB) Student Loan Omsbudman has released a report about consumer complaints of servicing problems that make it difficult to lower their payments in relation to their income.
“Student loan servicers continue to fall short when it comes to helping borrowers address $1.3 trillion in student debt,” said CFPB director Richard Cordray. “It’s time servicers focus more effectively on processing applications for income-driven repayment plans properly.”
Many student loan borrowers mentioned that they deal with prolonged processing delays and wrongful rejections by servicers when trying to take advantage of income-driven repayment plans. The delays can cause increased interest charged and lost eligibility for certain financial protections. The CFPB is releasing a “Fix It Form” so that servicers can improve their level of service.
"Student loan servicing breakdowns can stack thousands of dollars of hidden costs on the backs of borrowers who can least afford them,” said CFPB student loan ombudsman Seth Frotman.
Frotman stated that too many student loan borrowers do not know how to pay for their loans based on their current income. He believes servicers can use the report to take steps to mend what he believes is a broken process.