CFPB Report: Borrowers Have Few Options to Avoid Defaulting on Private Student Loans
For those that are close to default, private student loan companies offer very little information to distressed borrowers, provide no affordable loan modification options and repayment alternatives are temporary.
The report comes from an analysis of more than 5,300 private student loan complaints registered between Oct. 1, 2013 and Sept. 30, 2014. Complaints increased 38 percent from last year.
The CFPB estimates that there is $1.2 trillion in outstanding student loan debt, with more than 7 million Americans in default.
"The response by the private student loan industry to distressed borrowers is failing to help them avoid default," said CFPB student loan Ombudsman Rohit Chopra, who submitted the report. "Too many borrowers are barely treading water, losing hope that these companies will throw them a lifeline."
That lifeline, unfortunately, doesn't seem to be coming.
When struggling borrowers tried to find more information, they found the company's website lacking. They also reported receiving conflicting or inaccurate information as they were bounced between multiple customer service representatives.
Unlike federal loans, which by law are required to provide a range of loan medication options, private loans don't offer these types of services, forcing some students into default. Their only option seems to be temporary forbearance, which gives borrowers a brief period of time when they don't have to make their monthly payment. The time is limited though and borrowers complained of enrollment fees and processing delays that lead to surprise defaults.
The CFPB put together a sample letter for borrowers to edit and send to their student loan provider to request lower monthly payments and information available on repayment plans. There is also a sample financial worksheet to assist borrowers to determine how much they would be able to afford to pay each month.
Student loan borrowers can also find help using the CFPB's Repay Student Debt tool. This interactive resource offers a step-by-step solution to navigate borrowers through their options, especially when facing default.
You can Buy A Car At the Dealership Like A Pro. Here's How You Can Be Prepared.
So you're finally ready to trade in your current car for a new one! Congratulations on such an important step. If you've never bought a new car before, you may know nothing about the process. To begin with, there are a number of things you should do to get ready to buy the car before you ever step on the dealership lot.
Can you Use Money That Is Mistakenly Deposited Into Your Account?
Have you ever noticed that your bank account somehow had 'extra' money in it even though you knew for a fact it wasn't yours? If so, you are not alone. It happens more often than you would think. All it takes is for a bank teller to type in one wrong number at the time a deposit is being made.
Low Interest Automotive Financing Might Not Be Best Deal After All
Great rates do exist. But even if you are offered a low interest car loan, you can probably save more money by accepting a slightly higher rate and using rebates or other incentives or by getting your own financing and taking the rebates and incentives.
Following These Tips Can Help You Save Your Hard-Earned Money at Tax Time
Many people feel like they just can't get ahead when it comes to money. What you may not know is that saving during tax season can start you on the path to financial security. We urge you to take advantage of tax season to prepare for unexpected emergencies or plan for the future. Here are some tips to help get started.