Consumer Financial Protection Bureau building in Washington. (Photo: Diego M. Radzinschi/ALM)
What a difference a year makes. Since appointees of President Donald Trump took control of the Consumer Financial Protection Bureau, it hasn't taken "a single substantive action to stand up for student loan borrowers."
Those are the opening lines of a new report, A Year Without Action, from the Student Borrower Protection Center, cataloguing what happened to student loan borrowers in the meantime.
The center was founded by Seth Frotman, the CFPB's former assistant director and student loan ombudsman, who resigned from the agency very publicly in August, writing in a letter that the agency was "sacrificing the financial futures of millions of Americans."
(Related: CFPB Shutters Student Protection Unit)
"The CFPB has an obligation to protect student borrowers from predatory behavior and expose unethical or even illegal activities that occur during the entirety of the student loan experience," said Karl Frisch, its executive director. "How can it fulfill this obligation if it continues to suppress important information from being released to the public?"
That failure is presumably one reason the Student Borrower Protection Center has published its own report.
According to the center's report, the student debt burden is fast approaching $1.6 trillion as outstanding student debt grew by $83.5 billion between the third quarter of 2017 and the third quarter of 2019, and new debt originations reached $100 billion.
Over the past year, more than 8.5 million borrowers took out student loans for the first time and 5 million fell behind at least two payments.
In addition, there were 1.13 million defaults, adding to the more than 1 million defaults every year for the past four, and 13,283 complaints filed by borrowers concerning loan servicing and collection practices.
As of summer 2018, 99% of nearly 29,000 student loan borrowers who had filed applications for Public Service Loan Forgiveness were denied.
The report highlights a "broken student loan system," which includes loan servicing abuses suffered by military service members and veterans, older parents and grandparents who have co-signed student loans for their children and grandchildren, and borrowers pushed into higher interest repayment plans with little warning.
It contains multiple examples of the these problems, quoting student loan borrowers recounting their experiences anonymously.
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