In an effort to reduce student loan repayment stress, the CFPB today is launching a public inquiry into student loan servicing practices that can make paying back loans a stressful or harmful process for borrowers.
The bureau is specifically seeking information about industry practices that create repayment challenges, hurdles for distressed borrowers and the economic incentives that may affect the quality of service. The CFPB also will re-launch an enhanced version of its Repay Student Debt online tool to help borrowers figure out their options for affordable repayment.
The initiative will begin with an open public field meeting Thursday in Milwaukee, Wis. CFPB Director Richard Cordray, along with a variety of representatives from consumer advocate organizations, will call for public comments on the challenges posed by student loan debt servicers.
"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," CFPB Director Richard Cordray said. "Today's inquiry seeks information on the pain points in student loan servicing that make repayment a more difficult and stressful process."
Student loans make up the nation's second largest consumer debt market, which has grown rapidly in the past decade. Today more than 40 million federal and private student loan borrowers collectively owe more than $1.2 trillion. An increasing number of borrowers are struggling to stay current on their loans, and repayment roadblocks only have exacerbated the problem, the bureau said.
The public inquiry will focus on several problem areas, including industry practices that create repayment problems and create hurdles for distressed borrowers. The CFPB will also consider the availability of information about the student loan market, economic incentives that affect the quality of service and the application of consumer protection practices from other markets.
The CFPB is working with the Department of Education and the Department of the Treasury to identify initiatives to strengthen student loan servicing. Members of the public are encouraged to submit comments.
The submissions to this request for information may serve to assist federal and state regulatory and enforcement agencies in prioritizing resources. The public comments will also be used in a report required by a recent Presidential Memorandum.
The deadline for submitting comments to the bureau is July 13, 2015.
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