The seven largest private student loan servicers will now be supervised by the Consumer Financial Protection Bureau, and U.S. Sen. Dick Durbin (D-Ill.) is pushing for more safeguards for borrowers.
Until now, the CFPB has regulated only federal loan servicers. Durbin claims that without that supervision, millions of borrowers have been given inaccurate information and charged unnecessary fees. Hannah Moore of Chicago says her debt ballooned to $160,000, and forced her parents to come out of retirement to help.
“They are co-signers on my loans,” Moore said, “so that means if I default, they default.”
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Durbin says Moore was kept in the dark by her lender about available alternative payment options until his office got involved. He says his proposed Student Loan Borrower Bill of Rights will add more protections.
“In the future, under these private loans, you can consolidate them at a lower interest rate and get notifications of what you’re getting into,” Durbin said.
The seven largest servicers process payments for 49 million students.