Today there are over 40 million Americans dealing with student loan debt. The lending market is huge, but, in many cases, lacks lender accountability and fair treatment for borrowers. One main concern is the lack of information made readily availability to borrowers. For example, borrowers may require information on unique instances of eligibility for loan forgiveness or avenues of recourse following instances of predatory lending. To help address the issue, the Department of Education (ED), in consultation with the Department of the Treasury and the Consumer Financial Protection Bureau, has been working over the past few years to expand protections for postsecondary student loan borrowers, and to create more stringent compliance policies for lenders. On July 20th, the ED press office released a Dear Colleague Letter titled “Education Department to Implement Improved Customer Service and Enhanced Protections for Student Loan Borrowers.” The letter acknowledged the need for increased borrower protections and lender accountability, and offered up additional resources for borrowing students.
The letter first goes into a list of enhanced expectations for servicers to provide timely and up-to-date repayment guidelines and appropriate feedback to borrower inquiries, then moves into some current and anticipated borrower resources. ED articulated plans to establish an online portal through which borrowers can access information and manage their accounts, but has not yet provided an anticipated date of its roll-out. Immediately available resources include: explicit guidelines on loan forgiveness eligibility through the Permanent Disability loan discharge program, research outcomes from a pilot program to explore assistance to delinquent borrowers, and transparent information about student loans in default.
The ED letter also calls for new partnerships with state law enforcement, including enhanced internal oversight, to increase borrower protection standards and compliance.
Finally, the letter provides a reminder of the launch of the Federal Student Aid (FSA) Feedback System. As of July 1st borrowing students may now access the online portal to submit any complaints or positive feedback. Through this portal (link here), FSA works to resolve cases individually on behalf of participating students including issues pertaining to “suspicious activity,” which includes any interaction that alludes to fraudulent activity on the part of either institution or student. As of now, the Feedback System gives students a bit more control in the financial aid process, but time will tell if complaints are handled in a manner satisfactory to students’ needs.