6 Senators Ask CFPB to Prove Theyre Protecting Student Borrowers - OppLoans

6 Senators Ask CFPB to Prove Theyre Protecting Student Borrowers - OppLoans 6 Senators Ask CFPB to Prove Theyre Protecting Student BorrowersInside Subprime:  May 1, 2019By Aubrey SitlerIn early April, six U.S. Senatorsâ€"including Sens. Elizabeth Warren (D-MA), Kirsten Gillibrand (D-NY), Dick Durbin (D-IL), Sherrod Brown (D-OH), Sheldon Whitehouse (D-RI), and Bob Menendez (D-NJ)â€"submitted a letter to the nation’s financial watchdog agency, the Consumer Financial Protection Bureau (CFPB), demanding to know how they are protecting student loan borrowers.In particular, we are concerned that CFPB leadership has abandoned its supervision and enforcement activities related to federal student loan servicers,” the authors write. “This suggests a shocking disregard for the financial well-being of our nations public servants, including teachers, first responders, and members of the military.They specifically called out the CFPB’s lack of effective oversight of loan servicers that administer the Public Service Loan Forgiveness Program (PSLF), a federal progra m that promises full loan forgiveness to those who work in public service and make income-driven monthly payments for 10 years (120 total payments). The Senators’ letter to the CFPB came in the wake of last year’s U.S. Department of Education data, which divulged that of the 41,000 student loan borrowers that had requested loan forgiveness through PSLF, only 206 had seen their loans discharged.NPR has reported extensively on many of the issues borrowers have experienced in relation to PSLF’s failure to forgive their loans. Many of these borrowers believed and were even told by their loan servicers they were on the path to loan forgiveness after the required 10 years of repayments, only to learn months or years into making those repayments that their repayment plans did not qualify for PSLF due to a myriad of previously undisclosed reasons.The CFPB’s student loan ombudsman, Seth Frotman, led an investigation into borrowers’ complaints about PSLF in 2017 and found a high num ber of people who had made it years into repayment before learning their loans would not be forgiven. Some had the wrong type of loan, some were enrolled in the wrong repayment plan, some were not employed by eligible employers, and some had not consolidated their loans correctly. Regardless, loan servicers made an array of mistakes in how they advised and filed paperwork on behalf of borrowers who thought they were enrolled in PSLF.The Government Accountability Office also conducted an investigation into PSLF that identified similar concerns. GAO’s Melissa Emrey-Arras told NPR that investigators found a huge number of borrowers who had made life decisions around being enrolled in PSLF, only to “find out months and potentially years later that [they] don’t qualify and that [they’re] not actually eligible for forgiveness.”The Senators’ letter reminds the CFPB of its duty to protect borrowers from these kinds of financially destructive abuses, stating: “ Regulating the s tudent loan industry is a core part of the Bureaus consumer protection mission. Congress created CFPB to serve as an independent federal financial regulator with broad regulatory and supervisory responsibilities for bank and nonbank providers of consumer financial products and services.”For more information on scams, predatory lenders and payday loans, see our city and state financial guides including states and cities like California, Texas, Illinois and more.Visit  OppLoans  on  YouTube  |  Facebook  |  Twitter  |  LinkedIn