CFPB Says Consumers with Private Student Loans Can’t Get a Break
By Consumers Union on Thursday, October 16th, 2014
The sticker price for going to college just keeps getting bigger these days – sometimes, even exhausting your options for federal grants and student loans won’t cover it. So some students have to turn to private loans – from banks, or big firms like Sallie Mae, to make up the difference. But those loans are wreaking havoc on borrowers’ finances, because lenders are more interested in their bottom lines than helping their customers.
According to a new report released today by the Consumer Financial Protection Bureau (CFPB), complaints about private student lenders are going up. They analyzed over 5,000 complaints from borrowers this past year, and found that complaints reveals that many borrowers tried to find out more information by calling their lender or servicer, but received conflicting or inaccurate information. Some borrowers were provided no option at all, driving them into default, even though a reduced payment plan might have been the best solution for both the borrower and the lender.
The problem with private student loans is that they don’t come with the flexible repayment options federal student loans have. Without guaranteed consumer protections, private student loan borrower are at the mercy of their lenders.
We think it’s unfair that these big private lenders got bailed out in 2008 when the markets crashed, but won’t give students a break. That’s why we’ve been calling for more protections for private student loan borrowers. But until we see real change, our advice is to stay away from private student loan as much as you can. Exchaust your options for federal aid first, and only borrow the minimum amount you need to pay for expenses while in school.
Do you have a student loan? Have you had problems working with your lender or servicer? If so, share your story!