CFPB Issues Advisory for Those Repaying Private Student Loans
On October 16, 2013 the Consumer Financial Protection Bureau (CFPB) issued a consumer advisory to those repaying private student loans. The advisory cited the CFPB’s recent report by its student loan ombudsman, which documented numerous problems with the way that private student loan servicers processed payments. Those problems included:
- Losing checks and then charging borrowers late fees on the account.
- Processing excess funds in order to maximize interest rates for the servicer, to the detriment of the borrower.
- Processing partial payments so as to maximize late fees for the borrower.
- Failing to provide accurate payoff information for those borrowers seeking to repay their loans early.
- Failing to notify borrowers when their accounts are transferred to a new servicer, resulting in frustration, late fees, and risk of delinquency.
You can get details on these incompetent and unfair processes in Nolo’s article Repaying Private Student Loans: Watch Out for These Pitfalls.
The CFPB’s advisory, Stop Getting Sidetracked by Your Student Loan Servicer includes tips for submitting payments to private student loan services, provides a sample letter for borrowers to send to their servicers when processing certain types of payments, and reminds consumers that they can file complaints about private student loan lenders and get help from the student loan ombudsman by visiting www.consumerfinance.gov/complaint.