Miller Requests Cooperation from Private Student Loan Lenders in Addressing Challenges Faced by Borrowers
WASHINGTON – U.S. Rep. George Miller (D-Calif.), the senior Democrat on the House Education and the Workforce Committee, today wrote letters to private student loan lenders including Sallie Mae, Inc., Wells Fargo, Pennsylvania Higher Education Assistance Agency and Citi Bank, seeking information on their lending practices and their “cooperation in addressing increasing difficulties confronting private student loan customers who struggle to find work and repay their student loans.”
A recently issued report from the Consumer Financial Protection Bureau (CFPB) found that private student loan borrowers face many roadblocks, runarounds and dead-ends to repayment. Since March 2012, the CFPB has received approximately 2,900 complaints on private student loans. According to the report, student loan borrowers’ complaints “resemble many of the same issues experienced by mortgage borrowers,” ranging from being unable to contact the appropriate lender personnel during hardships to an array of challenges when trying to refinance or modify the terms of the loan.
In addition to requesting information from private student loan lenders, Miller also asked the U.S. Government Accountability Office (GAO) to examine problems reported by student loan borrowers with federal student loan servicers – many of whom are also engaged in private student lending.
“According to CFPB, among the complaints it received during the reporting period were numerous instances where companies misapplied student payments, failed to resolve its own errors in a timely fashion and failed to connect the appropriate personnel with borrowers to explore repayment options in times of economic hardship,” wrote Miller to the GAO. “Accordingly, I respectfully request that you further examine these and other loan servicing and modification practices that adversely impact student loan borrowers.”
CFPB’s report found that 95 percent of complaints were about loan servicing. Unlike federal student loans, private student loans generally have higher and variable interest rates. Today’s request of GAO and private student loan lenders builds upon Miller’s long-standing legislative and oversight efforts to protect borrowers of both federal and private student loans. In 2007, for example, as chairman of the Education and Labor Committee, Rep. Miller successfully investigated the prohibited, unfair and deceptive practices that lenders used to market their products and services to students and institutions. The investigation highlighted the need for significant changes to student lending and resulted in the passage of the Student Loan Sunshine Act, which required institutions to adopt codes of conduct and use preferred lender lists and required clear disclosures for private student loans.
The full text of the letter to GAO can be found here.
The full text of the letter to Sallie Mae, Inc. can be found here.
The full text of the letter to Wells Fargo can be found here.
The full text of the letter to Pennsylvania Higher Education Assistance Agency can be found here.
The full text of the letter to Citi Bank can be found here.
For more information on the Student Loan Sunshine Act, click here.