Millions of Americans are struggling to pay back their student loans. They're understandably anxious and stressed.
All too often, their situation is made worse, they say, by the companies that service their loans. These servicing companies manage the accounts and process the monthly payments for the lender.
At a public hearing in Milwaukee on Thursday, the Consumer Financial Protection Bureau (CFPB) will announce that it is launching a public inquiry into the student loan servicing industry. CFPB Director Richard Cordray says he wants to find out which industry practices create repayment challenges and hurdles for distressed borrowers.
"Student debt stress can make borrowers feel like they are walking a tightrope where any false move in paying back a loan can cause them to fall," Cordray said in a statement. "Today's inquiry seeks information on the pain points in student loan servicing that make repayment a more difficult and stressful process."
The CFPB received more than 28,000 comments and complaints about student loans in the past two years.
An analysis of this information shows that the problems often start as soon as a student graduates. Common complaints include trouble with the posting of payments, lost records, slow response times in fixing errors and a general lack of customer service.
The CFPB hopes to learn if the student loan servicing industry:
- Does things that make repayment more complicated and costly
- Applies payments in ways that maximizes fees
- Has an economic incentive for poor quality service