Borrowers continue to report widespread problems with student-loan servicing, according to a report released on Tuesday by the Consumer Financial Protection Bureau.
The report, which is based on more than 30,000 comments that the federal watchdog received as part of its recent inquiry into the servicing industry, describes a range of practices that the bureau says harm borrowers, including poor customer service, mishandled paperwork, and “surprise fees.”
Tuesday’s report comes just two months after the bureau ordered a private student-loan servicer, Discover Bank, to refund nearly $16 million to borrowers for alleged errors in billing statements and illegal collection practices.
In a statement issued with the report, the bureau said it had “made it a priority to take action against companies that are engaging in illegal servicing practices” and would “explore potential industrywide rules to increase borrower protections.”
“Today’s report underscores the need for marketwide student-loan-servicing reforms to halt harmful practices and boost assistance for distressed borrowers,” said Richard Cordray, the bureau’s director.
Also on Tuesday, the bureau, along with the Departments of Education and Treasury, issued a “Joint Statement of Principles on Student Loan Servicing” as a framework to improve servicing practices. The statement, which was required under President Obama’s Student Aid Bill of Rights, commits the federal agencies to ensure that servicing is “consistent,” “accurate and actionable,” “accountable,” and “transparent.”
