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Earlier today, The CFPB released a report reviewing the state of student loan servicing, identifying the industry’s pervasive failures. The report – informed by more than 30,000 public comments – details both the systemic issues and logistical blunders that have created barriers to repayment, increased costs, and contributed to sending already-struggling borrowers into default.
With over $1.2 trillion dollars in student loan debt held by 41 million Americans, student loan servicing plays an ever-more critical role in ensuring that debt is managed responsibly.
“Unfortunately, today’s report is just the next iteration of a long line of complaints against student loan servicers,” said Ethan Senack, U.S. PIRG’s Higher Education Advocate.
Earlier this year, a Department of Justice and FDIC investigation into servicing giant Navient resulted in a $100 million settlement, and calls for further investigation have emanated from prominent members of Congress and consumer advocacy organizations alike.
“With 1 in 4 student borrowers in default, we can’t wait any longer to fix this system. It’s high time for servicers to be part of the solution, instead of the problem,” said Senack.
The report includes a Joint Statement of Principles from the Departments of Education, Treasury, and the CFPB, outline critical areas for change, including:
- Creating consistent standards across the servicing market
- Taking further action to hold servicers accountable for violations of the law
- Developing a framework for borrowers to receive clear, accurate information
- Improving publicly available data on the industry
Senack continued: “While we recommend those in the industry voluntarily adopt the CFPB’s framework for high-quality servicing, we also strongly encourage the CFPB to enact more rigorous oversight of student loan servicing.”
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