Outstanding U.S. student loan debt is now over $1 trillion, according to a new federal study, with college loans now surpassing credit cards as the largest source of unsecured consumer credit.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress established an ombudsman for private student loans within the Consumer Financial Protection Bureau. On Thursday, Oct. 18, the ombudsman released an initial annual report on the state of the college loan market.
At least $8 billion in private student loans are in default, representing more than 850,000 individual loans.
Between March and September this year, the Consumer Financial Protection Bureau received more than 2,850 complaints against private student loan companies, 46 percent of them against Sallie Mae followed by American Education Services at 12 percent and Citibank at 8 percent, which in 2010 sold its Student Loan Corp. division based in Stamford to Discover.
“By far, the most common concern communicated by borrowers has been the difficulty negotiating a repayment plan with their servicer in periods of unemployment, underemployment, or financial hardship,” stated Rohit Chopra, student loan ombudsman at CFBP, in the report. “Many borrowers report frustration that they are unable to identify appropriate personnel that can make a determination about their repayment options.”
