When borrowers complain about student loan debt it is most likely they are talking about private education loans.
And the Consumer Financial Protection Bureau has been getting an earful of complaints about these types of loans that don't have the consumer-friendly repayment plans that federal loans do.
The CFPB, which has oversight over private student loans, has been collecting comments from borrowers for months for a report to Congress next month.
Today, the agency released nearly 2,000 comments, with the names and other personal data removed. From an initial peek at them, borrowers have fallen into serious trouble with private loans that -- thanks to a 2005 move by Congress -- can't be wiped out through bankruptcy.
Here are some of the stories:
“I graduated in 2009 from Gonzaga University School of Law with roughly $90,000 in student loans. Within a month of graduation, I had to find a temp job as my husband's work was cut to part-time. I finally passed the Washington bar in 2010 and have been unable to find an attorney job despite diligent efforts and strong credentials. My solo practice is not particularly profitable and I have not been able to make a single payment on my student loans. Recently, my parents took out a mortgage on their home to pay for my student loans because the interest rate for the mortgage was less than half the interest rate on my student loans. In hindsight, had I known how dismal the job market would have been when I graduated, I would have remained working as a Paralegal and never attended law school. I think the inflated cost of education in this country, even for public universities is inexcusable. It is nonsensical that a law school education that requires nothing more than books, paper, and computers, should cost $1,000 per credit at a loan interest rate of 8.3% or higher when in some countries education is free to citizens who qualify for the degree program."
“Repaying my student loans was and is a nightmare. I lost my job in 2010, and asked for a deferment. The subsidized student loans had no problem, but the private loans (both handled through Sallie Mae) wouldn't budge. I still had to pay $200/month (After I was gouged for my interest rate, but that's a different complaint). When I couldn't pay any more and had no more income, they still demanded payment. Even though the subsidized loans accepted a deferment form, the private loans told me I needed to file the same form with them but also pay $50 (my unemployment having run out 2 months before). They refused to have the deferment paperwork transferred over, and now they are threatening to take me to court.”
"I have private student loans with two different companies, Access Group and Citibank. Both of them have made countles errors in the administration of my loans. Their customer service is often unable to help me, or worse, tells me they will do something, and then fails to do it. Many of their internal policies seem to be designed to force borrowers into missing payments. For instance, Access Group has no way to sign up for autopay on their website. You have to fill out a form and mail or fax it in. They often lose this form so you have to send it multiple times. Then, it can take several months for it to be "approved." In the meantime, it is much more likely that a borrower will miss a payment since it will not be autodebited.Furthermore, if you try to make a payment that is higher than the monthly minimum, both Access Group and Citibank automatically apply that extra to interest instead of principal, ensuring that your principal balance stays high and preventing the quicker reduction of the loan balances. After almost two years of making payments, I now owe more than I did when I started."
"I make $26,000 per year BEFORE taxes. I cannot find a job in my chosen career field although I have a bachelor's degree. My payments alone are almost $500.00 a month, which is what I pay almost in rent. I have no extra income to save towards retirement, nor can I work in the field of my choice. I have to go back to get a master's degree to even qualify for the majority of the fields, thus assuming another $20,000 in debt. I am currently $52,000 in debt on loans, although I have taken out as many grants/scholarships I could. Most of have been cut or reduced that I qualify for. I cannot live like this."
"I am drowning in over 140,000.00 in student loan debt, with 1,000 per month in payments, of which almost 800 is interest. I can barely support my family and request the help from family just so my daughters can eat on a monthly basis. Student loans are out of control. I could be spending that money helping the economy recover instead of stuffing the portfolios of banks, who already have taken my taxes in the form of bailouts.
You can read more online.
Rohit Chopra, the CFPB’s student loan ombudsman, says that once the agency figures out all the problems, it will work with schools, lenders and other government agencies to fix them. He encourages troubled borrowers to continue telling their stories so the CFPB can understand how to help the next generation of borrowers.
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