In May 2015, the Consumer Financial Protection Bureau launched an inquiry into student loan servicing practices. In light of the increasing number of older Americans paying back student loan debt, they asked to hear about how it’s affecting older consumers.
The CFPB received over 30,000 public comments in response to our inquiry, including a number of comments from older consumers. Last week the Bureau released a comprehensive report detailing these comments and the repayment roadblocks borrowers encounter when working to repay their student loan debt. In part, the report discusses how older consumers are unable to manage their student loan debt or get assistance to manage the debt while staying on track to save for retirement or pay for other necessary expenses on a reduced retirement income. Older consumers described an array of servicing problems including misapplied loan payments, late notifications and limited access to key documentation. Some older consumers with federal student loans report being at risk of garnishment of their Social Security benefits, even though they depend on these benefits for a significant portion of their income.
The report offers insight into potential remedies to improve the marketplace for students and co-signers, and will inform the Bureau’s continued regulatory, supervision, and enforcement activities.