Believe It or Not, the Situation With Student Loans for Borrowers Has Only Gotten Worse
Last year, the Department of Education and the Bureau of Consumer Financial Protection published some guidelines to protect student loan borrowers. Education Secretary Betsy DeVos sent a letter (PDF) to the Federal Student Aid Bureau yesterday withdrawing some of these guidelines.
The new federal rules were designed to make information about lenders more transparent and accessible to borrowers so that they can avoid default, solve problems and analyze their financial capabilities. How did they want to do it? Weed out creditors with a terrible reputation.
The Department of Education is the lender of all federal loans, but they use private companies to actually service these loans. When customers began to complain about dishonest customer service, misleading information, and improper payment management, the previous administration established a set of guidelines that would help weed out these companies.
DeVos canceled this guide, among other things. In a letter, she explained:
“This process has been subject to many shifting timelines, changing requirements and a lack of agreed goals … We must create a student loan service environment that delivers the highest quality customer service and increases accountability and transparency for all borrowers, as well as limiting costs for taxpayers.”
This is as good a reminder as any other that you should know who your loan provider is when you take out a federal student loan. Log on to the Federal Student Aid website to find your federal loan representative. Once you know who you are dealing with, you can check the CFPB Consumer Complaints Database to see what specific issues other customers are complaining about. One way to protect yourself is to know what issues you need to be vigilant about.