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The CFPB Wants Your Help With Student Loan Debt

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These days, more experts are starting to point out just how bad the student debt problem in the U.S. has become, and as a consequence, the federal watchdog agency tasked with helping consumers safeguard their finances wants to see what it can do for Americans carrying these often massive balances.

The Consumer Financial Protection Bureau recently issued a questionnaire that anyone can fill out, and is now accepting public comment on what Americans think should be done to address the significant problems these debt loads can cause for everyone from doctors and teachers to office workers, according to a report from the agency. Public comment is open through April 8, and Americans can submit suggestions about what can be done to make education financing more manageable in the future. The agency wants to hear from everyone from borrowers themselves to lenders, educators, parents and even business leaders.

“Thousands of people struggle to manage student debt. Many consumers want to make good on their obligations, but struggle to negotiate an affordable repayment plan with their lender,” the CFPB said. “We recently announced our effort to better understand ways to spur more affordable private student loan repayment options. We need your help making a plan that will work.”

Through the end of last year, some $8 billion worth of private student loans were in some stage of default, across more than 850,000 balances, the report said. The CFPB wants to hear from the people whose balances fall into this category in particular, because privately-issued student financing typically comes with far fewer repayment options than those from the federal government. For those who do have federal student loans, the CFPB also recently put together a tool that helps borrowers figure out the repayment options that will work best for them, including income-based choices that help them to better afford their repayments and stay current on their obligations.

Today, the average college student graduates not only with tens of thousands of dollars worth of education loans to pay off, but also other debt obligations, including those on credit cards and for auto loans. These can combine to significantly hinder the ability of a young adult to gain full financial independence even within a few years of their having left school, and may further lead to diminished credit scores that make new accounts less affordable.

Image: iStockphoto

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  • Brett

    I went to and spent about $30000 @ at the Art Institute, and didn’t graduate because I owed them cash money to continue my education. Student loans weren’t enough. I now have tens of thousands worth of student loans and nothing to show for it. I don’t think student loans should be allowed for such institutions. If your as stupid as I was then u should pay out of pocket for everything at a crappy private school. Student loans should only be available for reputable institutions, not private schools trying to turn a profit.

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  • http://yahoo carl pachmayer

    not only are student loans a problem but has anyone seen the statements sent out by the agencies issuing the student loan. there is no breakdown on the interest charged in dollars and the amount applied to the principle. the american education services does send individual statements for each amount borrowed nor do they provide a breakdown of the amounts being applied to each loan. if they are providing this information it is not in the standard format for statements on money owed. it took this agency three years before they contacted me about my sons default on his loans. why so long? was it to build up the excess interest on the original loan which now totals more than seven thousands dollars. i believe they should reduce this interest to the original amount. they are also charging six point seven per cent interest on this loan which i feel is somewhat excessive. this should be for the year not the month. if you would like i would be glad to meet with anyone from this group to discuss this loan and to show how students are being taken advantage of. yes they do send about seven pages of rules and regulations but what student takes the time to read the seven pages of six point print with a magnifying glass.

  • Lynn Stutes

    My son has over 100,000.00 in private student loans. They are impossible for him to pay off and will be a debt he now has for the rest of his life. The interest is capitalized, he never sees his payments applied to the loans ( as they don’t break down the loans to indicate which loan the money is being applied to) and his income tax refunds are always seized but he never sees where that goes. He has become very depressed about this and regrets even ever going to college (aviation administration degree which he cant find any openings) He never realized the difference between the “private” student loans and the federal student loans. The private loans do not allow a deference or a lower payment for a longer period of time. The confusion is the loans are handled by Sallie Mae Department of Education. Then my son has loans from the Department of Education but those are Federal loans and not handled by Sallie Mae ( but then some of those balances look the same but we cant tell if those are the same loans) Then he apparently has some state loans- one from the Illinois Student Assistance Commission ( he just now found about. To add insult to injury Illinois has assigned his debt to a horrible collection agency NCO who are just horrendous to work with refusing to send statements etc. This is just a mess. We have visited Senator Fosters office but we just got the runaround and they handed us our file back. Such injustice ! Capitalized interest should be illegal. And I feel the bankruptcy should be allowed. It would certainly give my son a new lease on life!!!!

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  • Kelly

    I graduated from college in December, 2010, with a teaching degree. I cannot get a job. My husband is also unemployed (long term). We are both 55 and will be paying my student loans until we die. Depressed? Yes, I am.

  • Cody

    I do not have student loan debt, fortunately. My folks had a small trust set up specifically for college, which helped cover tuition and living expenses so that I could be a full-time student. It helped me get through 2yrs of community college. HOWEVER, I’m seriously wondering if I can even continue my education at this point now that the trust fund is tapped out. I received an Associate Degree from the community college but cannot find work applicable to my degree. So what happens when I take out student loans for a Bachelor Degree and STILL cannot find work applicable to my degree(s)???

  • RINA MAXWELL

    My son wants to go to Johnson & Wales University. Although they’ve awarded him over 27,000 in grants and federal loans (Stafford Sub, Stafford Unsub., and Perkins), he still needs $14,000 to attend. We applied to Sallie Mae and were approved, but when we looked at what he would actually be paying back at the term of the loan it amounted to OVER $40,000. That is just wrong. There is no way in his chosen profession he could pay back over $120,000 in private loans; not to mention the federal loans. It’s a catch 22. You have to have a college education to even get a job anymore, but then you have loans that would take a lifetime to pay back and make your life a hardship to boot, even if you get a good job.

    • Credit.com

      Rina – Thank you for comment, it’s a great example of one of the biggest mistakes new college students make when financing their education. The cost of education has skyrocketed in the last 10+ years and one big factor students have to consider is whether or not their education is worth the price they’ll pay for it — especially if their chosen profession won’t pay enough to help them cover the loan payments after graduation. It’s frustrating, no doubt, but it’s good to see that parents like you are there to help guide your children away from making mistakes that can end up costing them for a very long time. It’s why we advise students to make sure they explore all of their options — from scholarships, fellowships, work study– and yes, even a less expensive school if necessary, to help subsidize the cost of a college education these days.

  • The Mallard

    I am a father of ten children and I had six before even finishing school. I am trying to raise them, pay my bils, and now I am considering Bankruptcy just to eliminate enough debit that I can afford to even attempt to pay back loans that are almost as much as my house payment. My house needs so much work, and I cannot even afford to fix it because I’m scared to death about student loans. I borrowed $54,000 for a bachelor’s degree by the time I can pay it off I’ll have paid close to $154,000 in interest and all. No wonder I need to include it in the bankruptcy along with all the other bills my exwife created but stuck me with paying during the divorce. Let’s not even talk about how alimony is affecting my ability to pay student loans.

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