Wed04232014

Opinion

Coping with student loan repayment

Charlene Crowell-160

A new report from the Consumer Financial Protection Bureau (CFPB) found that many of the same types of loan servicing problems that affected consumers in the mortgage market are now affecting student loan borrowers.

Just as troubled homeowners were often unable to pay their mortgages, refinance their loans, or receive timely assistance from loan servicers, many student loan borrowers are now experiencing many of the same difficulties. Although the report focuses on private student loans, some of the servicing problems identified also affect federal student loan borrows.

"Unfortunately, with few refinancing options, many student loan borrowers tell us they feel stuck in loans with high rates, well after they've graduated and landed a job," said Rohit Chopra, CFPB's Student Loan Ombudsman.

After analyzing approximately 3,800 student loan complaints submitted from Oct. 1, 2012 through Sept. 30, 2013, CFPB focused on problems with crediting payments to private student loan accounts. In this manner, CFPB found that nearly half of these complaints came from consumers seeking a loan modification.

Further, 87 percent of complaints received were directed at one of eight companies. Sallie Mae, a financial services firm specializing in educational loans for more than 40 years, topped the complaint list with 49 percent.

Since July, CFPB has accepted complaints on debt collection activities, hearing from consumers whose accounts defaulted and were sent to collections because they were unable to afford their loans. Other complaints told of questions regarding how loan payments were applied, lost payments, late fees and changes in servicers without borrower notification.

In a weak economic recovery, many borrowers are financially challenged to pay their loans on time. Still others, facing financial hardships through unemployment and under-employment are finding few and no available options to refinance private student loans.

Even so, CFPB advises that there is yet hope for challenged borrowers determined to make good on their debts and get on with their lives.

Providing clear and timely instructions to your servicer can direct how your payments are applied and likely reduce the interest paid over the life of the loans.

For example, consumers with multiple credit cards and balances on each are usually advised to retire the highest-priced card debt first. A similar approach can apply to retiring private student loans.

Most borrowers take out multiple loans to pay for college, and private loan interest rates can change from year to year. Following graduation these loans are often bundled into a single account or billing group. The borrower, however, receives one bill for all loans incurred. As payments are remitted, the loans will have different balances and still have different interest rates.

By paying the minimum amount due on each loan first, additional available monies can applied to the loan with the highest interest rate. Over the life of the loans, giving priority payment to the most expensive one will likely save thousands of dollars.

Conversely, if a borrower can only afford a partial payment, speaking with the servicer before the payment due date can help avoid unnecessary late fees and penalties. Knowing the exact minimum amount and the interest owed on each loan can guide which loans can be paid and their corresponding amounts. Armed with this knowledge, it may also be possible to minimize delinquent fees or penalties.

If borrowers do not direct how their payments are to be applied, loan servicers typically act in the interest of the lenders: applying payments to earn the most money for the lender. Loan servicers should not apply payments in a way that benefits them rather than the borrower.

The Center for Responsible Lending urges the CFPB to act promptly to address all complaints alleging unfair, deceptive or abusive practices. In addition, the CFPB and the Department of Education can and should work together to establish requirements for both federal and private student loan servicers.

In the interim, troubled borrowers should seek assistance early. If communications with loan servicers do not resolve borrower concerns, the CFPB's online complaint system can take information and assign a complaint number that can be used to check complaint status at rspnsb.li/Hdlc0O. If you prefer to speak with CFPB directly, call their toll-free line at (855) 411-2372.

(Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .)

Comments   

 
0 #35 plumbing service 2014-04-16 11:55
Even the more economical Mighty Mate M53 has a metal insert
in its glass thermoplastic impeller for reinforced strength.
Even if you try flushing manually, it just doesn't work.
Foul smelling water from your faucet is an indication of a problem.


Also visit my blog :: plumbing service: http://ahlxjy.net/category/leaking-faucet/
Quote
 
 
0 #34 drain cleaning 2014-03-30 10:26
This is because in a commercial building, it is not enough to fix a leaky faucet.
For home owners in the North Shore region, discovering the
right plumbing professional might be a problem. Homeowner's
insurance primarily covers the home's structure and its contents,
say during a ffire or theft and replacement cost of insured items, which maay include:
televisions, clothing, appliances,etc.
Quote
 
 
0 #33 seo melbourne 2014-03-29 08:48
This studies have helped the expert SEO consultants in London, uk.
popularity, they study the objectives of your business and your
target audience. Find out whether they have certifications or not, it will give
you more confidence to work with them.
Quote
 
 
0 #32 business finance 2014-03-29 02:58
Search for Flyer distributors, or even approach other
small businesses that you have just received flyer from and ask them who they used
to give out their flyers. Your key ' need to knows' in this regards are
issue such as:. It is in your best interest to keep an eye on all your transactions to prevent identity theft.
Quote
 
 
0 #31 blocked drains 2014-03-27 21:27
If you are planning to convert your uninhabiutable basemet or cellar into additional living space one of the most
important aspects of the whole project wiull be controlling the damp
(damp proofing). Tedtimonials and referrals are the greatest ways
to evaluate thee capabilities of a company. A seeping water pipe,
damaged toilet, or a stopped-up drain may be harder to ressolve as
you may believe.
Quote
 
 
0 #30 google search 2014-03-24 18:18
Everyone loves what you guys tend to be up too.

Such clever work and coverage! Keep up the fantastic works guys I've incorporated you guys to blogroll.
Quote
 
 
0 #29 quick payday loan 2014-03-12 06:11
When someone writes an paragraph he/she maintains the image of a user in his/her mind that how a user can understand it.
So that's why this paragraph is perfect. Thanks!
Quote
 
 
0 #28 payday 2014-03-12 06:08
Usually I don't learn post on blogs, however I would like to say that this write-up very compelled me to check out and do so!
Your writing style has been surprised me. Thank you, very
great article.
Quote
 
 
0 #27 payday 2014-03-11 07:29
Thanks for sharing your thoughts on TSD Memphis. Regards
Quote
 
 
0 #26 quick payday loan 2014-03-11 05:45
Having read this I believed it was rather informative. I appreciate you taking the time and effort to
put this informative article together. I once again find myself personally spending way too much time both reading and commenting.
But so what, it was still worth it!
Quote
 
 
0 #25 quick payday loan 2014-03-11 05:19
Howdy excellent blog! Does running a blog similar to this take a lot of work?

I have virtually no expertise in programming but I was hoping to start my own blog
in the near future. Anyways, if you have any suggestions or tips for new blog owners please share.
I know this is off subject nevertheless I just had to ask.
Kudos!
Quote
 
 
0 #24 easy payday loans 2014-03-10 20:37
My spouse and I absolutely love your blog and find the majority of your post's to be exactly I'm looking for.
Would you offer guest writers to write content to suit your needs?

I wouldn't mind producing a post or elaborating on many of the subjects you write in relation to here.
Again, awesome web log!
Quote
 

Add comment


Security code
Refresh