New Protections for Student Loan Borrowers

What protections do student loan borrowers have to ensure that their loans will be serviced properly and that they will not become victims of debt collection scams? According to a recent news release from the U.S. Department of Education (DOE), the DOE has partnered with the U.S. Department of the Treasury and the Consumer Financial Protection Bureau (CFPB) to take action to “better support the more than 40 million Americans with federal student loans.” The recently announced further actions is supposed to build upon the 2015 Joint Statement of Principles on Student Loan Servicing, which called for “consistency in student loan servicing practices.”
New Initiative for Student Loan Data on Credit Reports
When the DOE made the announcement about its further plans to take action to protect student loan borrowers, it announced a “new initiative to modernize the way student loans appear on borrowers’ credit reports.” In addition, the DOE plans to develop new loan-servicing objectives that will help with the Department’s plan to create “a new state-of-the-art loan servicing system.” With a new system, the DOE hopes to “improve student loan servicing practices, promote borrowers’ successful loan repayment, and reduce borrower defaults.”
Given that there are many different options for federal student loan repayment—many of which are not known or are not clear to borrowers—the DOE also wants to make repayment options clearer for students. As such, it is also developing a new webpage that will help to personalize the student loan repayment experience for individual borrowers. According to the news release, it will “better inform student loan borrowers about repayment options best-suited to their unique circumstances.” Representatives from the Department emphasize that an investment in higher education remains extremely important for young students, and the DOE wants borrowers to know they have options and support for repaying what they owe.
New Credit Reporting System
Why is it important for the DOE to take steps to modernize the way in which student loan debt appears on credit reports? For many students, borrowing federal loans is one of the first ways they begin establishing credit. As such, student loans tend to be an important part of a student’s credit history, and thus it is extremely important for loans to be repaid on time. However, timely repayment is not necessarily reflected consistently on credit reports.
With the CFPB and the U.S. Department of the Treasury, the U.S. Department of Education is working alongside credit reporting industry parties “to update and develop guidance to ensure that credit reporting for student loans fairly, consistently, and accurately reflects repayment activity.” The agencies recognize that consumers with student loan debt rely on accurate credit reporting related to their repayment activity.
Contact an Oak Park Consumer Protection Attorney
Millions of Americans are dealing with both federal and private student loan debt, and many cannot afford to make their loan payments. In some cases, you may be able to discharge student loan debt by filing for bankruptcy. If you have questions about managing your student loan debt or about holding a loan servicer liable for fraud or harassment, a dedicated Oak Park consumer protection lawyer can assist you. Contact the Emerson Law Firm today for more information about how we can help.

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