WASHINGTON—The CFPB’s Student Loan Ombudsman has released a report finding consumers complain of servicing problems that make it difficult to get lower student loan payments tied to their income.
According to the CFPB, student loan borrowers seeking to take advantage of income-driven repayment plans with their federal student loans complain to the CFPB about prolonged processing delays and wrongful rejections by their student loan servicers. “These delays and rejections can result in increased interest charges and lost eligibility for certain federal benefits and protections,” the CFPB said.
To help borrowers overcome these obstacles, today the CFPB is publishing what it is calling a prototype “Fix It Form” that servicers can use to improve the level of service they provide.
“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.”
"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. “Too many student loan borrowers are struggling to take advantage of their right to pay based on how much money they make. Servicers who want to better serve their customers can take the immediate steps recommended in this report to clean up this broken process.”
The CFPB Student Loan Ombudsman’s Midyear Report is available in the CUToday.info Vault here.