When federal student loan payments were paused during the pandemic, many borrowers became susceptible to a growing number of student loan scams, including those by predatory lenders and servicers employing alarming practices to fuel their greed.
Thankfully, the Consumer Financial Protection Bureau (CFPB) has stepped up to protect borrowers’ financial safety.
Predatory debt relief services, such as GST Factoring, Inc. and Champion Marketing Solutions, LLC, targeted struggling Americans who finally felt relief from the pause on the student loan payment. As a result, borrowers lost a grand total of $11.8 million. The CFPB defended borrowers by leading a lawsuit against the companies to secure redress for harmed consumers and permanently ban those predatory organizations from targeting borrowers again. Additionally, last year the CFPB teamed up with the U.S Department of Education to counter student loan servicers’ attempts to deceive borrowers eligible for the Public Service Loan Forgiveness Waiver.
Unfortunately, it’s not just corrupt servicers that have disrupted the financial security of millions of Americans — universities across the country have joined in to exploit student borrowers. The CFPB stepped up to expose university-owned lender services for weaponizing registration restrictions, withholding transcripts, and engaging in improper lending relationships.
With federal student loan interest accrual set to resume this September and payments due in October, the CFPB will continue to monitor the aggressive tactics of student loan lenders and servicers— shining a light on the financial institutions that seek to take advantage of struggling students.
But now, in addition to threats from predatory industry figures, borrowers have to worry about numerous attempts to cripple the CFPB from Republican legislators who are against student loan forgiveness and other borrower protections – amplifying the need to protect the CFPB’s power as an independent regulator.
If Republicans are successful in their mission to gut the CFPB’s funding mechanism, it could be disastrous for 40 million Americans who carry student debt—including one in five borrowers who are likely to struggle when their scheduled payments resume.
Student borrowers are grappling with the uncertain fate of the student loan forgiveness program. But as financial insecurity hovers over millions of borrowers’ heads, the CFPB’s mission has never been more important.