The Consumer Financial Protection Bureau just released a fresh report showing that student loan servicers are falling short in their efforts to help borrowers pay down loans.
According to the CFPB, most borrowers with federal student loans have been entitled to fix their monthly student loan payments to their income and family size, bolstering their ability to remain current through what’s known as “income-driven repayment plans.”
However, the CFPB report released this week shows that borrowers looking to participate in the income-driven program face a number of hurdles. These include an “application abyss” where applications are periodically delayed, as well as processors who reject applicants over trivial errors on the application.
Additionally, applicants may face a yearly recertification requirement that exposes them to the aforementioned issues once again.
To address these concerns, the CFPB has released a “Fix It Form” that they hope will aid servicers working to improve their processes.
National Association of Realtors® President Tom Salomone said he appreciates the Bureau’s willingness to tackle student debt issues and hopes their report will lead to positive change for borrowers.
“It’s no secret that student debt is taking a tremendous toll on young people today, limiting opportunities for them to advance in life,” said Salomone. “That includes the negative effect that high student debt has on the ability to purchase a home. We’re hopeful this report and the accompanying ‘Fix It Form’ helps servicers address the systematic problems that make it harder for borrowers to remain current on their loan so they can take the steps necessary to reduce their debt burden.”
CFPB estimates note that the combined total for outstanding federal and private student loan debt stands at nearly $1.3 trillion.
NAR adopted policy earlier this year seeking to help more student borrowers refinance their debt and streamline income-based repayment programs. NAR also supports efforts that promote education and simplification of student loans, as well as measures to ensure that mortgage underwriting guidelines related to student loan debt are standardized in a way that puts homeownership closer in reach for responsible borrowers.