WASHINGTON (10/1714)--Struggling student loan borrowers are increasingly reporting that they receive little information or help when they get in trouble, according to a new report from the Consumer Financial Protection Bureau's (CFPB) student loan ombudsman.
The report is primarily based on 5,300 student loan complaints filed with the bureau from financial institutions with $10 billion or more in assets.
"We are hearing from consumers that they are driven into default because private student loan companies are not providing concrete loan modification options," said CFPB Director Richard Cordray. "Struggling private student loan borrowers are finding themselves out of luck and out of options. Lenders and servicers must redouble their efforts to deal with these distressed borrowers."
Common complaints from distressed borrowers include:
Among the recommendations in the ombudsman's report are potential changes to the U.S. Bankruptcy Code. One potential option is to determine whether the special bankruptcy protection afforded to lenders may be limited to those lenders that offer certain loan modification options.
"Providing incentives for market participants to encourage student loan borrowers to successfully repay and avoid default can also help to ensure that these borrowers will be able to fully participate in the economy even if they encountered economic challenges early in their working lives," reads the report.
The bureau also recommended that it be determined whether lenders and service providers are providing adequate and timely disclosures about repayment options, particularly in times of financial hardship.
Use the resource links below to access the full report, as well as a blog post from the ombudsman.