Private Student Loan Companies Provide Few Options for Borrower, Driving Them to Default
by Ashlee Kieler, Consumerist
By now we all know that for many consumers taking out private student loans is the only option when it comes to financing their higher education. We also know that many of those same borrowers will ultimately end up defaulting on their debt. A new report from the Consumer Financial Protection Bureau suggests that it’s not borrowers’ lack of willingness to repay that lands them further in debt, but a lack of resources provided by lenders that drives consumers to default.
The new report [PDF], which analyzed 5,300 private student loan complaints over the past year, reiterated previous assumptions that private student lenders are not doing enough to help struggling consumers repay their loan obligations and avoid default.
The report highlights borrowers helpless in the face of evasive practices perpetrated by many private student loan lenders.
Many borrowers reported proactively contacting lenders seeking to modify repayment terms to obtain a payment they can actually afford only to be met with rejection and refusals to provide assistance.
However, some borrowers reported that when they did receive information about repayment options they were often given the runaround by customer service representatives who provided conflicting or inaccurate information.