The Consumer Financial Protection Bureau (CFPB) is cracking down on student loan servicers.
Here’s what you need to know.
The CFPB, which is the federal watchdog for consumers and consumer financial products, wants to ensure that student loan servicers are acting fairly and transparently when it comes to student loan forgiveness. (Biden agrees to stop challenging student loan forgiveness after public outcry). Specifically, the CFPB wants student loan servicers not to misrepresent student loan borrower eligibility or make misleading statements to borrowers about both the Public Service Loan Forgiveness program and the newly-available limited waiver for student loan forgiveness.
(Student loan cancellation reduced to $25,000).
“We will be working closely with the U.S. Department of Education to ensure that loan cancellation promises for public service are honored,” CFPB Director Rohit Chopra said.
(Related: Biden cancels $415 million of student loans, but Bernie Sanders says cancel all $1.8 trillion of student debt).
Student loans: 3 things to watch for
The CFPB will be monitoring student loan servicers to ensure that they:
- provide complete and accurate information about the limited waiver for the student loan forgiveness when discussing public service loan forgiveness or student loan consolidation;
- have sufficient policies and procedures to direct student loan borrowers toward resources for public service loan forgiveness when borrowers ask or express interest; and
- promote the benefits of the public service loan forgiveness waiver to student loan borrowers who are either interested or whose student loan account implies they could be eligible.
(Biden should end student loan relief).
How to get limited student loan forgiveness
The Biden administration introduced a temporary limited waiver for student loan borrowers, which can expand eligibility for student loan forgiveness. (5 ways to get student loan forgiveness). Through October 31, 2022, student loan borrowers can receive “credit” for past student loan payments that weren’t counted because they were ruled ineligible. For example, if you made a late payment, an incomplete payment, or had the wrong type of student loans, completing a limited waiver can help you get credit for these payments retroactively. It’s a huge win for student loan borrowers, and the CFPB wants to ensure that student loan servicers are doing their fair share. To get the student loan forgiveness limited waiver, you can apply through Federal Student Aid.
“We want to make sure that every single borrower who could benefit from the PSLF Waiver has the chance to do so, and giving borrowers accurate and timely information about their eligibility is critical,” U.S. Secretary of Education Miguel Cardona said.
(If Biden cancels student loans, this will happen next).
16 million student loan borrowers will get a new student loan servicer
If you’re one of 16 million student loan borrowers, you may be getting a new student loan servicer this year. Major student loan servicers such as FedLoan Servicing, Granite State and CornerStone have decided to stop servicing federal student loans. This means that you could get a new student loan servicer, which could be a positive development. (Will student loan payments get postponed until 2023?). Student loan servicers are the companies to whom you send your student loan payments, and they manage customer service for your student loans. If you’re getting a new student loan servicer, then the Education Department will contact you in advance in writing. Until you get assigned a new student loan servicer, make sure to keep sending your student loan payments to your old student loan servicer. Once you have your new student loan servicer, if applicable, then update your autopay information. This will help ensure your monthly student loan payments are deducted regularly with no issue.
As student loan relief is scheduled to end soon, it’s important to have a student loan repayment plan in place. Understand all your options and choose the best one for your unique financial situation.
Here are some popular options to pay off student loans:
Student Loans: Related Reading
If Biden cancels student loans, this will happen next
Biden cancels $415 million of student loans, but Bernie Sanders says cancel all $1.8 trillion of student debt
Will student loan payments get postponed until 2023?
Biden should end student loan relief