WASHINGTON (MarketWatch) — The Consumer Financial Protection Bureau is pushing policymakers to offer more and better options for borrowers of student loans caught between financial distress and avoiding default.
The CFPB released a report Thursday based on consumer complaints on student loans.
The amount of student debt in the country is well publicized, $1.2 trillion and growing, but student loan borrowers are also defaulting on their loans, accumulating about $98.1 billion in outstanding loans.
“There is no specific law governing student loans like for the mortgage market,” said CFPB Student Loan Ombudsman Rohit Chopra during a conference call with reporters Wednesday. “We are weighing our options, trying to figure out how borrowers can be protected.”
Chopra, who’s charged with compiling the report, recommends that policymakers determine whether lenders and servicers provide adequate and timely disclosures to borrowers about repayment options, especially in times of financial hardships.
Under the Dodd-Frank Wall Street reform and Consumer Protection Act, Chopra makes such recommendations to the Senate Committee on Banking, Housing and Urban Affairs, as well as the Secretary of the Treasury, the Secretary of Education, the director of the CFPB and other Senate and House committees.
Chopra said that last year the CFPB recommended that policymakers look to the efforts to improve the servicing of mortgage and credit card obligations, suggesting they might also be applicable to the student loan market.
From October 2013 to September 2014, the CFPB fielded 5,300 complaints from consumers most of whom voiced concerns over running out of options to pay back loans and not receiving wiggle room from lenders. Sallie Mae/Navient received the most complaints, at 1,996,a 48% change over last years report.
Sallie Mae, which recently split into Sallie Mae and Navient, is the leader in student loans, other than the federal government.
Capitol Report: CFPB calls for more options to prevent defaults on student loans
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