Consumer agency opens inquiry on student loan services
WASHINGTON (AP) — Do companies servicing student loans make more money when they provide less service?
The federal government's consumer watchdog wants to see what changes can be made to help the 40 million people with student loan debt save money and avoid default.
The Consumer Financial Protection Bureau is opening a public inquiry Thursday into student loan servicing practices that it says can make paying back loans "stressful or harmful."
Loans are often serviced by companies that process monthly payments, assist borrowers with repayment options if they lose their jobs, and perform other tasks.
The federal agency's director, Richard Cordray, says that student loan servicers often make more money when they spend as little time as possible on each account, and typically get paid more when a borrower is in repayment longer.