Consumer bureau looking for ways to ease student loan struggles

ADVERTISEMENT
Most student loans are originated by the government. There are roughly 38 million student loan borrowers with over $1.1 trillion in outstanding debt, and the private loan market accounts for roughly $150 billion of the outstanding debt. There are more than 850,000 private loans in default, worth more than $8 billion, according to a report the CFPB and the Education Department submitted to Congress in July.

Education Secretary Arne Duncan backed the CFPB's efforts Thursday.

"Federal student loans remain the best option for borrowers, but we know some students have turned to private student loans and are struggling to repay," he said. "We're glad to see the CFPB is taking steps to help create options for those who are having trouble managing their private student loan debt."

Specifically, the CFPB is seeking input on how student loan burdens could hinder the broader economy, as borrowers buried by student loan debt might struggle to line up other loans for things like homes and cars. It also wants to know how struggling borrowers cope with their obligations, and what options exist for them to lower their monthly payments, including any examples of successful alternate payment programs found in other markets.

In October, the CFPB's student loan ombudsman released a report that found a range of problems facing private student loan borrowers. For example, many borrowers told the bureau that they struggled to find out how much they owed after graduating, while others struggled to actually contact their loan servicer and lacked options to affordably refinance their debt.

More in Finance

Barney Frank changes tune on rule at center of funding fight

Read more »