The private student loan industry smells a lot like the subprime mortgage industry: Dead ends, runarounds and few live customer service representatives to speak with. The same tactics that mortgage borrowers have faced are now happening for student loan borrowers, according to a new report from the Consumer Financial Protection Bureau.
The government watchdog on Tuesday released its annual report on student loans, including details from a database of complaints that opened to student loan borrowers in March.
“Student loan borrower stories of detours and dead ends with their servicers bear an uncanny resemblance to problematic practices uncovered in the mortgage servicing business,” CFPB student loan ombudsman Rohit Chopra said in a statement.
Nearly two-thirds of the 2,857 complaints filed in the database had to do with repayment issues, including complaints about fees, billing, deferment, forbearance and fraud. Thirty percent of the complaints were about problems facing borrowers unable to pay. Few were related to getting a loan.
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