CFPB: Private Student Loan Companies Provide Few Options For Borrower, Driving Them To Default – Consumerist

I found this article of interest as recentlly a well known internet preacherman has been "advertising" this

With the following comment:

Which raised a few red-flags as I have been dealing with the student loan fiasco for 20+ years.  Although the advertisement is not clear (nor is the attached website) as to what loans they are able to work with, it is disconcerting to see how many where so willing to turn over they identities to this company without a whimper.  The comments run into the thousands, and this is the first of two postings I am aware of by Feuerstein.

As I said in my comments, privately held student loans are handled much different than federally backed studdent loans.  A point this article makes quite clear.

By now we all know that for many consumers taking out private student loans is the only option when it comes to financing their higher education. We also know that many of those same borrowers will ultimately end up defaulting on their debt. A new report from the Consumer Financial Protection Bureau suggests that it’s not borrowers’ lack of willingness to repay that lands them further in debt, but a lack of resources provided by lenders that drives consumers to default.

The new report [PDF], which analyzed 5,300 private student loan complaints over the past year, reiterated previous assumptions that private student lenders are not doing enough to help struggling consumers repay their loan obligations and avoid default.

The report highlights borrowers’ helpless in the face of evasive practices perpetrated by many private student loan lenders.

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Although private student loans do not come with the same repayment plans afforded to federal student loans, many lenders may offer borrowers’ temporary forbearance.

The short-term fix, which provides a brief period of time when no payment is due, often does little to actually provide relief to borrowers. In fact, many consumers reported encountering burdensome enrollment fees and processing delays that sometimes led to surprise defaults.

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Officials with the CFPB say these shortcomings reflect an industry that has done little to make good on commitments by lenders to expand alternative repayment options.

“The response by the private student loan industry to distressed borrowers is failing to help them avoid default,” Rohit Chopra, CFPB student loan ombudsman says in the report. “Too many borrowers are barely treading water, losing hope that these companies will throw them a lifeline.”

Because there are few alternatives for private borrowers, many reported that the lack of assistance from lenders resulted in the consumer being driven to default.

CFPB: Private Student Loan Companies Provide Few Options For Borrower, Driving Them To Default – Consumerist