The Consumer Financial Protection Board released today a report outlining widespread servicing failures reported by both federal and private student loan borrowers. According to the CFPB press release:
Consumers describe companies using a wide range of sloppy, patchwork practices that can create obstacles to repayment, raise costs, cause distress, and contribute to driving struggling borrowers to default. The Bureau has made it a priority to take action against companies that are engaging in illegal servicing practices, and that ongoing work includes addressing many of the problems outlined in today’s report. The Bureau also intends to explore potential industry-wide rules to increase borrower protections.
To address the harmful servicing practices identified through the Bureau’s public inquiry, the report includes recommendations to improve borrower outcomes and reduce defaults. "These recommendations stem from public comments received by the CFPB and a Joint Statement of Principles on Student Loan Servicing, released today by the CFPB, the U.S Department of the Treasury, and the U.S. Department of Education. The principles offer a roadmap for student loan servicing reform, including a call to establish clear and consistent industry-wide standards."