Consumer Financial Protection Bureau Takes on Student Loan Servicing

We are in the midst of graduations across the nation and it can be a bleak picture for graduates looking for employment. Finding a job in a specific field can be difficult, but students must also take into account looming student loan payments. Large student loan payments prevent students from making other financial investments and this has long-term repercussions for the student borrower as well as the entire economy.

The Consumer Financial Protection Bureau recently announced that it is soliciting comments from the public about borrower experiences with student loan servicing. CFPB Director Richard Cordray stated that “[t]he inquiry seeks to determine if the student loan servicing industry is doing things that make repayment more complicated and more costly for consumers.

The CFPB has taken an active role in monitoring and regulating various consumer industries such as payday loans, mortgage servicing, and credit cards. It is not surprising to learn that in light of the staggering statistics about student loan debt, the CFPB is now taking action.

There is a lot of room for improvement in terms of regulating lenders and servicers. It is good to know that the voices of student borrowers are finally being heard. Hopefully those facing crushing debt loads will soon find some relief.

 

Rachel Gallegos

Rachel Gallegos

Lead Consumer Advocate, Steve Harvey Law

The Corinthian Colleges Closure and Debt Cancellation Debacle

Any discussion about student loan rip-offs should begin with Corinthian Colleges. The recent closure of this for-profit company left thousands of students stranded with no way to complete the education they had been promised and for which they took on crushing debt loads.

The Department of Education has announced that students who were enrolled or recently withdrew from school will be forgiven their federal loans but only if they forego credits they already earned. Students who have already graduated get no such relief. According to US News & World Report, some of the former students are also now challenging repayment of their student loans based on claims of fraud.

The closing of Corinthian Colleges brings up the issue of debt cancellation in the student loan context. If you have federal student loans, in certain circumstances such as school closings your debt can be canceled. You must be enrolled at the time of closing or have withdrawn from the school within 120 days of the closing.

Prior to the closure of Corinthian Colleges, the Consumer Financial Protection Bureau announced that $480 million in loan forgiveness will be made available for students who took out Corinthian Colleges high-cost private student loans. This is highly unusual as the protections and safeguards offered for federal loans normally do not exist for private loans. Loan forgiveness and debt cancellation are rare in the private loan context. Students are ordinarily left to negotiate directly with the private lender in hopes that the payments can at least be an amount that is affordable each month.

Corinthian Colleges is the tip of the of the student loan crisis iceberg. The student loan program in this country is not serving us well and cries out for reform.

 

RG-3Rachel Gallegos

Lead Consumer Advocate, Steve Harvey Law

 

The Foreclosure Crisis: It’s Not Over Yet, and Not Even Close in NJ

The Philadelphia Inquirer reports that 1 in every 234 homes is in some stage of foreclosure in New Jersey. This is a 17% increase over 2014 and clearly shows that the crisis in not over yet. While New Jersey is unique in its rate of foreclosure, the issue still plagues many homeowners nationwide.

In New Jersey, the high rate of foreclosures is also due to “robo-signing” issues in recent years. Those legal issues created a back-log of foreclosures and the flood gates have since opened. Homeowners in New Jersey and nationwide are also still fighting against decreased property values, unemployment, illness, and mounting debt.

Foreclosures destroy communities and do not benefit the homeowner or the lender. A resolution in which the homeowner stays in the home and continues to make payments is in everyone’s best interest. There are many options available for homeowners to resolve a foreclosure but the process can be overwhelming. Families facing foreclosure should immediately contact an attorney or housing counselor to seek assistance.

 

RG-3Rachel Gallegos

Lead Consumer Advocate, Steve Harvey Law