CFPB to Fold Watchdog Office That Oversees Student Loans
The CFPB has announced that a student loan watchdog office is getting downsized.
Student loan borrowers may soon have one less resource for help. The Consumer Financial Protection Bureau (CFPB) recently announced plans to downsize its Office of Students and Younger Consumers division - a part of the CFPB involved in oversight of the student loan industry.
This division focused on protecting student loan borrowers from debt collectors, loan servicers, and predatory lenders abuses, according to Consumer Reports. The latest news was released via an internal staff memo on May 9. In the memo, CFPB interim director Mick Mulvaney said the Office of Students and Younger Consumers will be folded into the CFPB’s financial education office amid other organizational changes “to make the bureau more efficient, effective and accountable.”
More than a dozen consumer advocacy organizations criticized the news, including Suzanne Martindale, senior attorney for Consumers Union, who said via Consumer Reports that the office has been crucial in helping ensure lenders and loan servicers have been treating borrowers fairly.
CFPB has been an active advocate for student loan borrowers according to agency data. It has created $750 million in relief to student loan borrowers throughout its tenure, MarketWatch reported.
Despite the worrying headline, changes to the bureau’s makeup aren’t new. In February, it announced the consolidation of its fair lending division into the CFPB’s consumer education office. There has also been mention of plans to end public access to its online consumer complaints database where complaints against student loan companies are found.
Tips for Resolving Problems with Student Loan Servicers
It’s too early to tell what effect the scaling down of the Office of Students and Younger Consumers will have on borrowers. Short of hiring a student loan lawyer, experts have offered these tips for handling problems with student loan servicers.
Maintain good records: Know who your loan servicer is, be aware of what types of loans you have with them, and retain records of amounts owed and payments. For federal loans, your servicer’s name and contact information can be found in the National Student Loan Data System. For private student loans, you can find lender information on your credit reports.
Understand your options: For students struggling with federal loan payments, there are numerous payment plans to cut monthly bills. A starting point is the Department of Education’s Repayment Estimator, which calculates federal student loan payments. Other options include the CFPB’s interactive Repay Student Debt tool that shows borrowers different repayment options and an income-driven repayment plan, which potentially lowers the monthly payment down to 10 percent of discretionary income. For private loans, lenders may propose options – or the CFPB’s ombudsman, who manages private student loans, can help.
Make a complaint: For federal or private student loans, file a complaint through the CFPB‘s online complaint portal or by calling 855-411-2372. Federal student loan holders can also file complaints on the Department of Education’s loan complaint site. Veterans can contact the GI Bill Feedback System. States also offer services to assist student loan borrowers.