A government agency that advocates for student loan borrowers is planning a widespread investigation into possible forms of everyday mistreatment.
According to the Huffington Post, the Consumer Financial Protection Bureau (CFPB) filed a "request for information" with the U.S. Education Department (ED). Currently, 40 million Americans have $1.2 trillion of student loan debt and the CFPB intends to determine whether or not they need to implement stricter rules for lenders.
The ED faces ongoing scrutiny for their alleged lack of oversight while their contracted lenders use deceptive practices. For example, borrowers have complained about their lenders intentionally incurring late fees and steering them away from helpful repayment plans.
"As a growing share of student loan borrowers reach out to their servicers for help, the problems they encounter bear an uncanny resemblance to the situation where struggling homeowners reached out to their mortgage servicers before, during, and after the financial crisis," Richard Cordray, CFPB director, said in an advanced copy of a public statement obtained by the HP. "Having seen the improper and unnecessary foreclosures experienced by many homeowners, the consumer bureau is concerned that inadequate servicing is also contributing to America's growing student loan default problem." He adds that it's "simply unacceptable" to leave borrowers "without robust consumer protections and a well-functioning servicer market."
The CFPB is a government agency that advocates for student loan borrowers, fielding complaints and holding the ED and its contracted lenders accountable. Even President Barack Obama has emphasized the importance of helping student loan borrowers get out from underneath their debt.
Studies show Americans paying off student loans are less likely to buy a car, open a mortgage on a home or start a family. Obama has launched campaigns to make community college free and to put the nation's colleges and universities on a rating scale.
