A new report from the federal Consumer Financial Protection Bureau (CFPB) highlights another way that the very companies that are supposed to be helping Maine student loan borrowers are cheating them. The CFPB says that some lenders are wrongly denying access to the Public Service Loan Forgiveness program to eligible teachers, nurses, and first responders.
And Maine lawmakers, influenced by these same companies, have backed away from legislation that would have protected our students, including our seniors who are now carrying student loan debt at unprecedented rates. Over the last decade, the number of Americans age 60 or older with one or more student loans quadrupled. These older Mainers co-signed loans to help their kids go to college and now are carrying that debt into retirement.
The federal government hires companies to manage federal student loans repayment plans, including income driven re-payment plans and loan forgiveness programs such as those for borrowers with disabilities or in public service.
In January, the CFPB sued, Navient, the largest student loan servicer in the country, for deceiving customers to save costs. Among the abuses by Navient the CFPB alleges are failing to tell students about income-based repayment plans so they can’t keep up with payments and obscuring renewal deadlines for borrowers enrolled in income-based repayment plans causing the student to default.
According to CFPB’s latest report, these abuses also include wrongly denying and failing to provide information about eligibility for the public service loan program, triggering months or years of unnecessary loan payments and costing consumers thousands of dollars.
These egregious practices affect an appalling number of Maine students. Maine ranks sixth in the nation in volume of student loan complaints to the CFPB with a whopping 571% increase in the first three months of 2017 compared to the same time frame last year. Complaints from Maine borrowers to the federal bureau averaged nearly 16 per month in 2017.
Yet, Maine lawmakers have bowed to the pressure of high-paid lobbyists from these servicing companies. In May the legislature’s insurance and financial services (IFS) committee unanimously passed out LD 1507, a bill to would protect Maine students from predatory student loan practices. Then Navient heard about the bill and their lobbyists descended on Maine. In an unusual move, the full Senate sent the bill back to the IFS committee rather than enacting it in a move to try to slow down or outright kill the bill.
Maine borrowers need the protections that LD 1507 would afford. Lawmakers need to put the needs of students and graduates ahead of servicing companies rife with abuse and deception.