Regulator calls out student loan industry
The Consumer Financial Protection Bureau put student loan servicers on notice this week with a report detailing industry practices it found suspect.
The report, which doesn't name any individual companies that collect on the $1.2 trillion in student debt, was compiled between March and June of this year.
The agency found these companies would charge borrowers late fees on all their loans when payments for one fell short -- even if the rest were paid in full.
The CFPB spotted lots of other little tricks: minimum payments were overstated and late fees got charged to some borrowers even if they made payments within a grace period. Or servicers might fail to provide necessary information borrowers needed to deduct student loan payments from their taxes.
In more serious cases, some borrowers who fell behind on payments were told they couldn't dismiss their student loans in bankruptcy even though there's a slim possibility in cases of \"undue hardship\".
Some debt collectors called borrowers at inappropriately early or late times. The CFPB identified 5,000 such calls during its 45-day examination period. One borrower reported got 48 of them.
The agency, born of the Dodd-Frank financial reform bill, said in a statement that firms with questionable practices are contacted for corrective measures. In particularly severe cases, it opens investigations.
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