“student Loans And Consumer Rights: Understanding Your Legal Protections” – Earlier this week, another government official resigned. Seth Frotman from the Consumer Financial Protection Bureau, or CFPB, announced that he is leaving the agency with a scathing letter that most of us can only dream of writing to our former bosses.

Frotman, who served as a student loan inspector at the CFPB, wrote in his letter that the White House has “turned its back on young people and their financial future.” He said the agency was on the side of lenders, not borrowers, and had failed to protect borrowers from usury activities.

“student Loans And Consumer Rights: Understanding Your Legal Protections”

Goldie Blumenstyk, a senior writer for the Chronicle of Higher Education, said the agency, which was set up as part of a financial reform effort under the Obama administration, began focusing on student loans later on. when there are reports of problems involving private lenders and credit card companies.

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“They’ve identified places where veterans are being charged where they shouldn’t be,” she said. “They have identified inappropriate service activities that banks have been doing, which banks have stopped doing.”

Blumenstyk said, based on his resignation letter, Frotman’s departure was the result of what he sees as the agency’s crackdown on claims against lenders. Frotman’s job is to be the public face of the agency when dealing with complaints from borrowers. Millions of student loan borrowers are working hard to stay on track and pay off their student loans. Most of you send your payment to your student loan servicer (the company that bills you) on time each month, and many of you may even deposit some extra cash to pay your bills up front. his loan.

All student loan borrowers have the right to make additional payments (called prepayments) at any time without any fees or penalties. If you can afford it, paying a little extra each month or making a one-time payment on your principal is a great way to reduce the total cost of your loan. Not only will you pay off your debt faster, but you’ll also save interest over time.

We are concerned that student loan servicers may make it more difficult for borrowers who have already paid off their loans. Some consumers have reported that, after trying to pay off their student loans, they were defrauded by their student loan servicer.

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These borrowers report that by reducing consumers’ monthly payments, their service providers have extended the repayment period and the amount of interest the consumer will have to pay. Consumers report that their service provider has done this without the borrower requesting the change and, in some cases, not letting the borrower know this change is imminent. While lower monthly payments may sound like a good thing, if consumers pay according to the amount on the new bill statement sent by their carrier, they will make smaller payments over a longer period—potentially increasing their total loan cost by hundreds of dollars.

“[My servicer] just sent me notice that they have automatically halved my payment–this without my consent. In fact, [my service provider] is trying to double my repayment period AND charge me the relevant interest. [My servicer] offers no way for me to manage the payment amount through their website or through their automated phone system. I can DISCOUNT my payment through these automated systems, but I cannot recover my original, higher payment amount.”

The service provider resets the repayment schedule, causing the borrower’s monthly payment to increase or decrease—a process known as “redisclosure” of the repayment terms. Re-disclosure happens for a number of reasons. For example, we’ve heard that changes to service providers’ computer systems can trigger re-disclosure of information for certain borrowers, sometimes including those who pay more to try to save interest and pay off their loan sooner. Re-disclosures can also occur when your student loans are transferred to another servicer, a service operation that has affected more than 10 million student loan borrowers since 2013. Borrowers trying to pay off their loans faster should watch out for unexpected re-disclosures and make sure they’re on track. Here are some helpful tips:

If you pay the exact amount of your monthly payment each month, you’ll pay off your loan balance on time and on time. For borrowers who are paying extra each month to try to get out of debt faster, here are some helpful tips:

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Earlier this summer, we joined leaders at the Departments of Education (ED) and the Department of Finance, as ED announced new standards for federal student loan repayment, including improvements in how student loan servicers should communicate with you when they make changes to the way they process payments, when they make changes to the way their systems work dynamics and whether your service provider has changed. We are continuing to work with student loan servicers, federal and state agencies, and other stakeholders to strengthen student loan servicing practices. The Bureau has also made it a priority to tackle illegal student loan servicing activities as they occur.

If you have questions about repaying student loans, check out our repayment tool,  Student Loan Repayment,  to find out how you can deal with your student loan debt.

Seth Frotman is the CFPB Student Loan Ombudsman. To learn more about our work with students and young consumers, visit  /students. Promoting economic and racial justice: Eliminating student loan debt and establishing college rights across the United States

A collection of 21 essays that present innovative, evidence-based, and concrete ideas to shape the 2020 policy debate. Authors in the new book include economists, economists, and academics. elite political scientists and sociologists who use cutting-edge research methods to answer some of the toughest economic questions facing policymakers today.

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The amount of student loan debt in the United States has skyrocketed over the past decade—more than tripling from less than $500 billion to more than $1.5 trillion since 2006. Furthermore, the debt repayment burden is enormous. large—about $400 per month on average.1 However, students have little choice but to pursue a college education. Where college was once seen as a ladder to society, students increasingly need a higher education simply to maintain their socioeconomic position.

For many, a college education is a necessary step to earning a living wage, but black students face a particularly heavy burden to fund a degree. This essay explains the disproportionately high student debt burden of blacks in the United States, even though all racially disadvantaged groups in the United States face the financial burden. especially when it comes to pursuing higher education and paying the necessary debts. (See “Snapshot” below.) In part due to the financial situation of their families, black students are often more indebted to white students and, even with higher socioeconomic status, , less protected by parental wealth.2 Then, after entering the labor market, young blacks faced a more difficult time paying off their student loans. in a labor market characterized by racial segregation, as demonstrated by the experience of previous groups of graduates.3 (See Figure 1.)

After college, young people are shaped by their indebtedness, including the urgent need to secure paid employment in an effort that doesn’t necessarily match career aspirations. their profession. New graduates with a heavy debt load enter the labor market faster and are more likely to work in unrelated fields after graduation.4 These borrowers have high levels of job satisfaction work and life in general are lower, and psychological well-being is lower in adulthood.5 Student loan borrowers are less likely to marry, buy a home or start a business.6

While the negative economic and psychological consequences of student debt are distorting employment options and reducing opportunities for creative pursuits for all borrowers, black students hardest hit. Evidence shows that student debt hinders family formation especially for the most vulnerable borrowers: black borrowers and those who have not completed their degree.7 Student loan debt was associated with poorer mental health and was even significantly associated with poorer sleep patterns in black borrowers, in particular compared with white borrowers.8

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In this essay, we briefly present a series of proposals to ease the burden of student loan debt and use our analysis to urge the complete cancellation of all college student loan debt. undergraduate and graduate, federal and private. We arrive at this policy recommendation after considering how less ambitious proposals have failed to fully redress the unsustainable status quo of rising debt as a cost-financing strategy. Higher education costs are increasing in the United States. Only the complete abolition of all student debt will fully protect black students, their families, and those in racially marginalized and vulnerable groups from the burden. burden of student loans while establishing higher education as a universal right and providing compensation to all those who had to rely on debt financing to pursue upward mobility through the system education.

Black Americans carrying an unusually high burden of student loan debt in the United States and other racially disadvantaged groups in the United States face a particular financial burden when pursuing higher education and paying college bills. necessary debt. Latinx students are underrepresented at 4-year institutions and have lower college completion rates than their white counterparts, all of which complicates their abilities.

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