Earlier this month the Consumer Financial Protection Bureau (@CFPB) launched a public inquiry into student loan servicing practices. Read their full press release here. It’s time your voice was heard. From my experience, the main barriers to repayment continue to be a lack of information made available to students from the time they take out loans to go to college through the repayment process and the importance of keeping their loans in good standing.
Industry Practices That Create Repayment Challenges
- I know that when a student loan goes into default, the charges added for collections can be up to 18% of the amount borrowed. These default charges can spiral out of control quickly for stressed out borrowers who already cannot afford their student loans.
- Many borrowers are not even aware of deferment, forbearance, or better yet, an income sensitive repayment options. For more information on repaying your federal loans visit the Student Loan Borrower Assistance website here.
- Bankruptcy may be an important option to consider when facing overwhelming student debt and dealing with private loans too. We can control payments and buy time under a controlled repayment plan, or perhaps there is an undue hardship that would totally discharge student loans in bankruptcy.
Don’t wait until loans go into repayment. Take immediate control and keep those student loans in good standing from the start to prevent balances owed from spiraling out of control. That’s my best advice to our newest graduating class of 2015.