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Washington, DC - The Consumer Financial Protection Bureau (CFPB), an agency created by Congress in 2010 to watchdog products like credit cards and student loans, released sobering new information this week about student loan borrowers. In both a blog post on August 16, and in a new report release, the agency found higher debts for several types of borrowers.
“Thanks to the Consumer Bureau’s supervision, student loan borrowers, policy makers, and even employers grappling with the problem on behalf of employees are better able to troubleshoot and implement solutions to burdensome student loans,” noted Christine Lindstrom, Higher Education Advocate for the U.S. Public Interest Research Group.
Of particular note:
30 percent of borrowers are not paying down their loan balances after five years in repayment; this figure has nearly doubled in a ten year period. Of these borrowers, the share that are delinquent, and being hit with a negative credit history as a result, increased by 26 percent in the past ten years.
Americans carry more than $1.4 trillion in student loans, which drag on the individual borrower as well as the broader economy. The consumer agency made several recommendations for borrowers, policy makers, and employers, to ensure that borrowers gain access to repayment options, like Income Driven Repayment, that can alleviate the burden of high student loan debt for borrowers facing financial stress.
However, the fate of the Consumer Financial Protection Bureau is precarious as banks and financial firms seek to weaken the agency’s supervisory powers and eliminate its independence, through Congressional and administrative action.
“The problems causing student debt are many,” Lindstrom said. “But they are made worse when borrowers encounter tricky financial products and practices. Students need a strong consumer agency in their corner.”
U.S. PIRG is a non-partisan, non-profit consumer organization that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society. On the web at uspirg.org.
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