The stunning findings of the CFRB are pushing the agency towards crafting new rules for the $1.3 trillion student loan market. It notes the problems are particularly acute in the servicing of student loans, which CFRB described as being unfair in part because borrowers are often mislead and assessed with unexpected fees.
As detailed in the report, the student loan market lags far behind other areas of consumer debt when it comes to defaults. And a lack of standards is a big reason why:
Student loan servicers are a critical link between borrowers and lenders. Servicers manage borrowers’ accounts, process monthly payments, manage enrollment in alternative repayment plans, and communicate directly with borrowers, including borrowers in distress. There are no consistent, market-wide federal standards for student loan servicing and servicers generally have discretion to determine policies related to many aspects of servicing operations.
This is no way to help prepare our next generation if we want it to lead this country. As the Teamsters and others have noted, the soaring cost of higher education is a major concern. The U.S. needs to make it easier for those seeking a college education to earn one, not saddle them with a lifetime of debt.
Government needs to do more to ensure student loan rates remain low so students can better afford their post-secondary schooling. And candidates for the 2016 election need to find innovative ways to address the problem. Some already have. But the hard work then needs to be done to implement the changes.
We can't allow America's future to drown in debt.