October 14, 2015

CFPB report: More struggles for student-loan borrowers

CFPB on Wednesday released its annual report on student loan complaints, which found that federal student loans made by private lenders "may have a higher concentration of borrowers in default or delinquency than the student loan market at-large."

The Annual Report of the CFPB Student Loan Ombudsman also noted:

  • borrowers with federal loans made by private lenders say they run into roadblocks when attempting to access income-driven repayment plans;
  • more than one in five of these borrowers are not making payments or are past due, but not yet in default; and
  • 95 percent of these borrowers are not enrolled in any kind of repayment plan.

The report also noted that more information is needed about the entire student loan market, "including more details about delinquencies, defaults, and how borrowers in income-driven payment plans fare over time," said a CFPB blog post on the report.

Last month, CFPB published a report outlining servicing failures reported by federal and private student loan borrowers. CFPB Director Richard Cordray noted that one in four student loan borrowers struggles to repay or is already in default.

"Today's report underscores the need for market-wide student loan servicing reforms to halt harmful practices and boost assistance for distressed borrowers," he said.

NAFCU Regulatory Affairs Counsel Kavitha Subramanian told CFPB in a comment letter in July that NAFCU appreciates CFPB's attention to this issue, but "premature regulations on student lenders and student loan servicers may negatively harm the ability of well-regulated credit unions to serve this important student demographic."