CFPB Announces Plans to Regulate Student Loan Servicers
By Consumers Union on Tuesday, December 10th, 2013
Are you currently paying back your student loans? If so, have you ever had problems dealing with companies that process loan payments, provide customer service, and keep track of your paperwork? Well, these companies – called loan “servicers” – are about to get a hard look from the Consumer Financial Protection Bureau (CFPB), the agency announced last week.
Starting in March, the CFPB will start regulating a handful of larger student loan servicing companies that process payments for more than 49 million borrowers’ accounts. The CFPB can use its authority to learn more about how these companies do business, and to crack down on any illegal behavior they find.
We’ve heard from many consumers about the problems they’ve had dealing with their servicers – everything from getting charged bogus fees or having payments processed late to having trouble getting basic information over the phone about their accounts.
For example, Christopher from Hastings-on-Hudson, NY told us about his failed attempts to work out a reasonable payment plan with his student loan servicer, and being unable to get any of the paperwork associated with his loan:
I took a job at a restaurant, but after Christmas one year, I literally only brought home $600 for the month. My fiancée at the time also had student loans through Sallie Mae, she called on her behalf and they asked her to fax in her pay stubs and they would see about lowering her payments. She is a RN and they lowered her payment to less than $200. So naturally, I tried to do the same thing since I only made $600 in a month. They said sorry but I have a private loan and the best they could do is lower my payment to $457.58 a month that would only cover the interest. I was dumb founded. I said what was interest rate? They said its variable, but currently it is 13.5% variable. I told them I signed the loan agreement at 6%. I have requested on three occasions to get a copy of said agreement, but have yet to receive it.
We think that borrowers deserve better treatment than that from the companies that service their student loans! They should be able to assert their rights, access their paperwork, get clear answers, and have a place to complain if things go wrong.
Have you had problems with your student loan servicer? Tell us your story.