Lenders provide BILLIONS of dollars in private loans to undergraduate students, and yet there has never been much oversight, leaving borrowers (you students) without a reliable resource to seek help when it comes to private student loan lenders.
Many students who take out loans from private lenders don’t realize that once they graduate and have to pay back the loans, have very little wiggle room. A late payment can have disastrous effects on their credit, and lenders have never really had the motivation to respond to borrowers’ concerns before.
But good news: The Consumer Financial Protection Bureau (CFPB) announced on Monday that it has opened a student loan complaint system for issues regarding, you guessed it, private student loans. Now there is a system in place for students to air out their issues with lenders and actually have the resources to do something about it.
While previously, private student loans were overseen by a patchwork of government agencies, there is now one central agency for private student loans within the Consumer Financial Protection Bureau to assist borrowers with private student loan complaints. So, instead of a bunch of decentralized and separate agencies trying to keep track of private student loans, there is now one single federal agency now responsible for watching out for all students and families who choose to borrow private student loans.
Why is this important? Well, unlike federal student loans, private student loans don’t necessarily carry the same consumer protections as federal student loans and borrowers can wind up hurting their financial futures.
According to CFPB, borrowers (you students or recent grads) can file a complaint, and they will then work with your lender to get a response–something that is awfully difficult to get without some backup. Obviously, the new agency can’t just wave a wand and make your debt disappear–that’s not what it’s been created to do–but they can make your voice a lot louder and get the attention of the financial institution.
The Consumer Bureau is dedicated to “gathering facts and providing tools” for students who need to take out private students loans. An online tool you can take advantage of now is the Student Debt Repayment Assistant, to help students understand the labyrinth of student loan repayment options.
Complaints can be filed at the Web site or by calling (855) 411-CFPB toll-free.
And remember, scholarships can be a big help in keeping down the amount of loans you might have to take out.
Do you think this is an effective answer to problems with private student loans? What’s your experience with taking out loans? Leave a comment in the section below!