The Consumer Financial Protection Bureau (CFPB) announced that it's stepping up its oversight of student loan servicers after it received word that some allegedly "made deceptive statements to borrowers" about the public service loan forgiveness program (PSLF).
The CFPB put out a bulletin recommending actions that student loan servicers, or companies that manage student loan accounts, should take to ensure they are not misrepresenting a borrower’s eligibility for PSLF.
"Illegal conduct by a student loan servicer can be ruinous for borrowers who miss out on the opportunity for debt cancellation," CFPB Director Rohit Chopra said. "We will be working closely with the U.S. Department of Education to ensure that loan cancellation promises for public service are honored."
Private student loan borrowers do not qualify for government forgiveness programs like PSLF. As an alternative option, they could consider refinancing their loans and potentially save money on their monthly payments. You can visit Credible to find your personalized interest rate and see how much you could save.
CFPB accuses servicers of providing inaccurate information about loan forgiveness
Student loan borrowers with an eligible public service job can qualify for the PSLF program that was established under the College Cost Reduction and Access Act of 2007. The legislation says that borrowers with federal Direct Loans who make 120 qualifying payments under their qualifying repayment plan while working full time for a qualifying employer can have the remaining balance of their loans forgiven.
However, the CFPB accused servicers of providing misleading information to borrowers about their ability to become eligible for PSLF. The CFPB said this "can lead to tens of thousands of dollars in loan payments that should have been canceled."
"We want to make sure that every single borrower who could benefit from the PSLF Waiver has the chance to do so, and giving borrowers accurate and timely information about their eligibility is critical," U.S. Secretary of Education Miguel Cardona said. "I appreciate the CFPB’s partnership in holding servicers accountable for their role in helping borrowers access loan forgiveness under PSLF."
While private student loan borrowers do not qualify for the PSLF program, they do have the option to refinance to help them potentially save on their monthly payments. Visit Credible to compare multiple student lenders at once and choose the one with the best interest rate for you.
CFPB says it will be watching 3 things
As the CFPB begins to watch student loan servicers more closely, it said it will focus on three different factors:
- If servicers are providing complete and accurate information about PSLF in any discussions with borrowers
- If servicers have sufficient procedures in place to recognize when borrowers are interested in or eligible for PSLF
- If servicers promote the benefits of PSLF to borrowers who are either interested or eligible
The CFPB warned servicers that they should consider enhancing their compliance management systems to ensure that borrowers are getting accurate information about PSLF.
If you are interested in loan forgiveness, contact your servicer to discuss your eligibility. If you have private student loans and don't qualify for forgiveness programs, you could also consider refinancing. Contact Credible to speak to a student loan expert and get all your questions answered.
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