On May 14, the Consumer Financial Protection Bureau will hold a field hearing on student loan servicing and announce a formal Request for Information on the issue of student loan servicing, which may lead to a proposed student loan servicing rule.
Center for Responsible Lending senior policy counsel Maura Dundon offers remarks on the consumer protection agency's announcement:
Today, the amount of outstanding student debt is in excess of $1.2 trillion – second only to the amount of outstanding mortgage debt in the United States.
In order to help borrowers successfully and responsibly pay off this debt, the CFPB should create and enforce sensible student loan servicing rules – rules that are guided by a commitment to prevent default and unfair fees, and encourage repayment. For example, the agency could facilitate enrollment into income-based repayment programs for distressed borrower. Good servicing practices lead to successful repayment of loans, which benefits borrowers and lenders alike.
Today, the CFBP will take an important step to address this significant and growing debt burden affecting households across the country by holding a hearing and issuing a Request for Information to gain a detailed understanding of the student loan servicing market and its shortfalls. Hopefully, the Request for Information will lead to a strong and fair CFPB rule that protects borrowers and clarifies the rules of the road for servicers.
The Center for Responsible Lending has released an issue brief outlining Seven Ideas for a Fair Loan Servicing System.
For more information, contact Catherine An at 202.349.1878 or catherine.an@responsiblelending.org.