The student loan market is rife with misleading and fraudulent practices, the Consumer Financial Protection Bureau stated in a report released Monday. Much of the misconduct is related to the post-pandemic return to repayment, when 6 million people started paying back their student debt for the first time, the CFPB reported. In total, 28 million people resumed paying student loans this past year following a pause during the COVID-19 crisis, the bureau found. “These violations include failing to provide appropriate avenues for consumers to communicate with their servicers, sending deceptive billing statements, withdrawing excess amounts from borrowers’ deposit accounts, and numerous problems related to processing of [income-driven-repayment] applications,” the report stated. The CFPB highlighted illegal practices from student loan servicers, including private lenders, federal loan servicers and higher education institutions that provide private loans. “The entire higher ed sector is implicated here,” said Stephanie Michelle Hall, PhD, a higher education policy expert at the Center for American Progress. Hall said she was pleased the CFPB report confirmed findings from education research and policy groups, but added the report was still very alarming. It “points to what a lot of us in the field think is a forthcoming default crisis and seeing a lot more federal student loan borrowers default into 2025,” she said. The CFPB stated that lenders misled borrowers about refinancing rules, used illegal collection tactics such as falsely threatening legal action and issued deceptive billing statements. Private lenders also had not made clear to borrowers that refinancing loans would result in losing access to federal loan cancellation programs, the CFPB added. Full story from Dan N.: https://lnkd.in/e4xEjt6n
