The Color of Money: Student ally grows more powerful

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WASHINGTON -- Got a problem with your student loan? Not sure where to turn when the company managing your payments isn't responding to your complaints?

Come March, you'll have a powerful ally because the Consumer Financial Protection Bureau will have supervisory authority over nonbank student loan servicers. The agency already had the authority to supervise student loans handled by the largest banks.

Now its expanded power will include nonbank servicers that manage more than 1 million accounts, regardless of whether they involve federal or private loans. The CFPB estimates it will have authority to oversee the seven largest student-loan servicers with more than 49 million borrower accounts.

The agency's student loan ombudsman, Rohit Chopra, released a report recently highlighting issues borrowers have had with the way their private student loans were being handled. The Consumer Bankers Association felt it was misleading, relying on a small percentage of all people who have private student loans to make sweeping characterizations of the marketplace.

But we don't have to go too far in the past for an example of problems in loan servicing: the housing crisis that led to many complaints about residential mortgages.

The CFPB is concerned that we face a sequel on a similar scale. With outstanding debt currently at about $1.2 trillion, student loans have now become the second largest debt load after mortgages.

"We have heard complaints from private student-loan borrowers that their servicer is not held accountable for answering their questions and providing quality customer service," CFPB Director Richard Cordray said during a teleconference with reporters. "Borrowers have complained that they had trouble making prepayments or partial payments on their loans. They have also complained that when their loans were transferred between servicers, their paperwork was often lost and processing errors were made that resulted in late fees."

The CFPB heard from one borrower who had signed up for automatic payments through her checking account. After her 36th payment was debited, she applied to have her co-signer released from the loan, which was a benefit that was advertised at the time she took out the loan. The lender rejected her application, arguing that some of her payments were late.

Other complaints in the Chopra report included problems with getting accurate payoff information. Some borrowers reported that they received conflicting payoff amounts or that after getting a payoff balance, they submitted that amount and thought their debt was satisfied, only to find out that their balance was incorrect and their account remained open.

"I am routinely frustrated monthly as I try to make extra payments," a reader wrote to me. "I am unable to get clear information about how the payments are being applied." Another wrote that it wasn't until after she read a previous column about the CFPB's report that she realized the larger payments she had been making on her loan weren't being applied to principal first.

The CFPB analyzed more than 3,000 complaints submitted from October 2012 through September 2013. Yet Mr. Chopra cautioned that the complaints might not be based on a representative sample and thus may not reflect widespread problems.

The agency shouldn't develop policy based on anecdotes. But here's where you can make a difference. The CFPB needs to hear more. Go to www.consumerfinance.gov/complaint and let your voice be heard. The more specific cases it investigates about what's happening when you pay your student loans, or the roadblocks you face when you can't, the better the agency can identify trouble spots during its examinations.

Your experiences can impact reform that may be needed.

But your complaint won't just be for informational purposes. It may get resolved. The CFPB forwards complaints to the servicing company and will work on getting you a response. Once a complaint is made, the servicer has 15 days to respond to the borrower and the CFPB. The agency expects companies to then resolve the issue within 60 days. You can track the status of your complaint and get email updates about it.

It's important to note that the majority of student loans made are federal student loans. I expect the agency to shine a light on servicing problems with both federal and private student loans.

What does this mean for you?

The CFPB estimates that 7 million student loan borrowers are in default on federal and private student loans. One out of every five U.S. households has student loans affected by student loan servicing. We can't afford not to head off any major problems for people faced with these debts.

The Webb Law hired patent attorneys Brian J. Gallagher and Kevin P. Hershey. Mr. Gallagher received his J.D. from Duquesne University School of Law. During law school, he clerked for Allegheny County Common Pleas Judge Michael E. McCarthy, and served as an advocate for veterans in criminal matters through the Duquesne University Veterans' Court Clinic. Mr. Hershey received his J.D. from the University of Pittsburgh School of Law. At Pitt, he received the CALI Award for Legal Process, a Dean's Scholarship, and was a legal writing and analysis teaching assistant.

Buchanan Ingersoll & Rooney said Matthew H. Meade, shareholder, was elected to the Children's Museum of Pittsburgh's board. Mr. Meade is a shareholder in the firm's litigation section, and co-chair of its data security and privacy group, where he provides advice regarding data security breaches. His practice includes commercial litigation matters as well as internal investigations and commercial technology matters.

Dean A. Calland, a founding shareholder, firm Babst Calland, was named an "International Who's Who" environment lawyer. Mr. Calland's international practice consists primarily of complex acquisitions and divestitures for multi-national chemical and manufacturing clients. Who's Who Legal, as the official research partner of the International Bar Association, selects nominees based upon surveys with both general counsel and private practice lawyers.

Gismondi & Associates said attorney Jason Matzus joined as a principal to the firm. Mr. Matzus brings with him over 18 years of trial experience in areas of medical malpractice and personal injury. A graduate of the University of Pittsburgh School of Law, Mr. Matzus focuses his practice on all types of personal injury claims, including those resulting from automobile accidents, truck accidents, medical mistakes, airplane accidents, construction site accidents, defective products, fires and explosions. He is an adjunct professor of law at Pitt Law.

Best Lawyers in America named 20 attorneys from Pittsburgh law firm Meyer, Unkovic & Scott as among the best in their practice area. They are: Joseph Bartoszewicz, real estate law; Thomas Berret, commercial litigation, personal injury litigation (defendants and plaintiffs); Robert Dauer, Jr., litigation (bankruptcy); Patricia Dodge, bet-the-company litigation, commercial litigation, product liability litigation (defendants); Andrea Geraghty, eminent domain and condemnation law, real estate litigation, real estate law; J. Robert Hanlon, Jr., real estate law; Ronald Hicks, Jr., commercial litigation, bankruptcy litigation, construction litigation, real estate litigation; Richard Kotarba, construction law, construction litigation, real estate litigation, real estate law; James Mall, commercial law, construction litigation; Robert Mauro, real estate law; Kevin McKeegan, land use and zoning law, litigation (land use and zoning), real estate law; Russell Ober, Jr., commercial litigation, construction litigation, product liability litigation (defendants); David Oberdick, commercial litigation, copyright law, intellectual property litigation, patent law, trademark law; Joel Pfeffer, immigration law; John Powell, litigation and controversy (tax law, trusts and estates); W. Grant Scott II, real estate law; Beth Slagle, commercial litigation, insurance law; Robert Struble, employee benefits (ERISA) law, trusts and estates; Dennis Unkovic, international trade and finance law;Joseph Vater, employee benefits (ERISA) law, employment law (management), ERISA litigation, labor and employment.

Brittany Holzer has joined Tucker Arensberg in its business and finance department. Ms. Holzer is a recent graduate of the University of Dayton School of Law. During law school, she served as secretary of her class and was a member of the Student Bar Association General Board.

Readers can write to Michelle Singletary c/o The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com.


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