By Pam Martens and Russ Martens: August 22, 2016
Last Thursday the Consumer Financial Protection Bureau Student Loan Ombudsman released a report detailing the hurdles and outright barriers that college students who took out student loans face when they attempt to get Income-Driven Repayment (IDR) plans. These plans allow student loan payments to be tied to income. The report found that the debt holders are reporting that they are facing prolonged processing delays and wrongful rejections by their private student loan servicing companies. Some facets of the report suggested that student debt holders are intentionally getting the runaround by the outside servicing company. The report noted:
“Borrowers report being rejected because their application had missing information or because their servicer lost paperwork, without ever being notified by their servicer or being given a chance to fix the problem. Other borrowers report being rejected simply for checking the wrong box, without being given the opportunity to submit a corrected form. These errors discourage borrowers from restarting the application process, and some borrowers may choose to walk away from their loan, instead of remaining on the road to repayment.”
We looked through the actual student complaints on which the report was based. One individual, calling him or herself, American Patriot, posed some important issues. We have excerpted from that complaint letter below. After you read these current complaints, you may want to browse through our related articles listed below to gain a fuller understanding of how many of today’s finest young people have been turned into student debt slaves by the same Wall Street banks that blew up the U.S. economy in 2008 and were then bailed out with more than $13 trillion in cumulative secret Federal Reserve loans, frequently below 1 percent interest, a fraction of what student loans charge:
Excerpts from complaint letter to CFPB from “American Patriot”:
“The student loan payment options are confusing. That said, the main issue is that the student loan payment and forgiveness options are too limited. This is by design because the Federal Government protects schools and lenders at the expense of students and their families who are treated like throwaway 3rd class citizens without civil or economic rights…
“Student loan interest rates are higher than home mortgage interest rates even though college education does not provide shelter as does a home, even if one completes their college education.
“Over several years companies have shifted the burden and risk of training their workforce to disenfranchised, poor students who cannot afford the exponential rise of tuition. Even when students obtain the recommended education, that is no guarantee that their education will be up to date or that they will get hired.
“Students do not build real estate equity while struggling to pay rent and attend school. When are students supposed to be able to purchase a house and perhaps even save for retirement?”
According to the CFPB, student debt is now the second largest source of consumer debt in the U.S., totaling a record $1.3 trillion.