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Consumer Watch: What to do when you are drowning in student loans

Communicating with your student loan lender in writing can help you if there are any mistakes on your bills. (MGNOnline.com)

The Consumer Financial Protection Bureau makes major changes that could hit student loan borrowers.

The student loan office has been cut, and folded into the financial education office in May 2018. There are concerns this could protect student borrowers less, but Bureau Director Mick Mulvaney says it makes everything more efficient.

In a 2015 report, the CFPD itself identified student loan debt as a crisis. The report also showed there is an increase in average debt that showed no signs of slowing, and identified the student loan market as being in distress with a quarter of borrowers being delinquent or in default.

Main protections from the CFPB included lawsuits against schools that recommended private loans with high interest rates over lower interest rate loans, or investigations of lenders not providing borrowers with enough information about their options.

The change makes it likely there will be a greater focus on financial information, and the possibility of less legal action for consumers. To prevent problems with your lender, communicate with them regularly. Calling to get information is good and easy, but you need to ensure you are leaving a paper trail of the communication.

  1. Communicate in writing: this leaves a paper trail if there are problems down the line.
  2. Think about auto payments: this will prevent late fees and could even get you a discount on interest. Be sure you regularly check that you are not double charged or that you were, in fact, charged at all to avoid fees.
  3. Learn about all repayment options and ask which applies to you. Ask about loan discharge or forgiveness. If you cannot afford your loans, there are many programs that can make payments more affordable. A lender may not offer you the help before you ask, so you can say you are interested and ask what you qualify for.

Often you can apply for reduced payments. It will lengthen the life of the loan, but could keep you out of default.

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