STATEMENT: Center for American Progress, Generation Progress Respond to CFPB Report on Distressed Private Student-Loan Borrowers
Washington, D.C. — Today, the Consumer Financial Protection Bureau, or CFPB, Student Loan Ombudsman released a report highlighting complaints from struggling student-loan borrowers who have been driven into default. David Bergeron, Vice President for Postsecondary Education at the Center for American Progress, released the following statement in response. Bergeron also testified before the Senate Banking Committee on student loans in July.
At a time when millions of student-loan borrowers are struggling to repay their loans, it is very disturbing to learn how little lenders are doing to help them. This report from the Consumer Financial Protection Bureau makes clear that the federal government needs to be doing more to protect private student-loan borrowers. Private student loans typically charge higher, often risk-adjusted interest rates; require co-signers; and lack many of the consumer protections that are standard in federal student loans. If private lenders won’t help, the federal government needs to step in and offer borrowers the ability to refinance their private loans with federal student loans that have better repayment options and lower interest rates.
Sarah Audelo, Policy Director for Generation Progress, also released the following statement in response:
It’s deeply concerning to hear private student-loan borrowers are being driven into default. Student-loan borrowers should have clear and easily attainable information regarding their private loans and repayment options.
There’s more private lending companies can and should do to help struggling borrowers, including making information more readily available. Students should be eligible for loan modifications, and private student-loan borrowers should not be backed into temporary fixes as a result. Congress has a role to play too. From expanding bankruptcy protections to allowing borrowers to refinance their student loans, more needs to be done to help borrowers.
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