Consumer bureau opens student loan complaint line

On Monday, the Federal Reserve Bank of New York reported that there were roughly $870 billion of student loans outstanding, which is expected to grow as college costs rise and enrollment continues. Already, student loan debt stands as the largest type of consumer debt, ahead of credit cards and auto loans, according to the bank.

Noting that student loans are now the largest source of consumer debt, the CFPB warned that private lenders of student loans, unlike their federal counterparts, can lack borrower protections. Those institutions were previously regulated by a "patchwork" of state and federal authorities, but now the CFPB is serving as a one-stop shop for all student loan headaches. The bureau expects to hear from lenders struggling to pay off their loans, confused about the terms of a loan, or grappling with a debt collector on loans that have defaulted.

After the CFPB receives word of a complaint, it expects the relevant financial institution to respond within 15 days with a plan to rectify the situation, which must be settled within 60 days.

The bureau sent word of its new complaint hotline to more than 6,000 university officials, urging them to pass along the agency's contact information to struggling borrowers.

The new student loan initiative marks the latest in what is a rapidly growing portfolio of projects for the CFPB. The bureau announced earlier this month it was accepting complaints on bank accounts, and last month unveiled a new review of "unfair" bank overdraft fees. It has also proposed rules that would allow it to oversee debt collectors and credit reporting agencies.

—This post updated at 3:57 pm.