Report Details Problems with Private Student Loans
A new report from the Consumer Financial Protection Bureau (CFPB) draws a beeline between the abuses of the subprime mortgage business and the problems now bubbling up in the private student loan industry.
Today, student loan debts total more than $1 trillion, of which private loans account for $150 billion, reports the Huffington Post. The student loan industry experienced a huge borrowing boom from 2004 to 2008, very much similar to what occurred in the mortgage industry. At the same time, the challenges faced by student loan borrowers echo those faced by mortgage borrowers, according to the CFPB.
The CFPB report calls out at three key servicing issues with private student loans: surprises in loan terms and conditions, lender runarounds and difficulty contacting a live person, and problems refinancing loans to take advantage of historically low interest rates, writes The Huffington Post.
Student loan borrowers also face the same issues with fees, billing, deferment, forbearance and fraud that bedeviled subprime mortgage borrowers. Indeed, more than 60 percent of the 2,857 complaints filed in the CFPB’s database of student loan complaints were related with repayment issues.