A place for student loan complaints

Last week, a new federal consumer protection agency launched a system to accept complaints from borrowers having trouble with their student loans. 

The Consumer Financial Protection Bureau is giving students and their families a place to go for help—whether they are having trouble taking out a loan, repaying a loan or managing a loan that has gone into default.

For years, students and families who had federal loans were able to turn to the ombudsman at RIHEAA or within the US Department of Education.  But there was nowhere to turn for those who had taken out private student loans and experienced problems. 

The new Consumer Financial Protection Bureau has targeted the private student loan market as an arena that really requires regulation. Those loans don’t always carry the same protections and benefits which federal loans have, so there was a real need to help people navigate what’s out there and protect themselves from being abused by deceptive marketing practices.

Since November, the bureau has been collecting thousands of stories from consumers since it invited them to share their private loan experiences. 

Now, they have created a streamlined complaint process where you can go to their website, www.consumerfinance.gov/complaint or call their toll free hotline at 1-855-411-CFPB.  They will work with the lender to get a response to your complaint. 

Each complaint will get a tracking number and the lender will have 15-60 days to respond or dispute the claim.

There are a number of complaints the bureau is expecting to hear about—difficulties in making payment arrangements, billing disputes, deceptive marketing and advertising practices, deferment and forbearance issues, aggressive collection processes and credit reporting problems.

The whole process to date has been about identifying specific problems and trying to prioritize the most serious problems that need fixing.  Through rules and regulations, the bureau is going to be able to address some issues, but other problems are going to need legislative fixes.  

Already the bureau has provided some terrific tools to help students and families, such as the Student Debt Repayment Assistant to help navigate the maze of student loan repayment options. 

There’s also their “Know Before You Owe” page which has a “financial aid shopping sheet” to improve the quality of information schools provide students about their loan offerings.  Taken together, the bureau has gotten off to a great start and is really making a difference for college-bound students and families.