Student Loan Servicers Deceived Borrowers

[Live and Learn]

and Manipulated Payments to Maximize Late Fees

Eric Reed
Oct 31, 2014 5:01 PM EDT

NEW YORK (MainStreet) - Student debt collectors have been deceiving borrowers according to a new report from the Consumer Financial Protection Bureau, resulting in unfair fees and damaged credit. The violations include maximizing late fees and deceiving borrowers regarding their debt, among other deceptive practices banned under the Dodd-Frank Act.

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This week's report applies to loan servicers, companies responsible for collecting and helping graduates to structure their payments. The CFPB flagged six major issues in the industry, including:

Structuring payments to maximize penalties.

Many servicers handle multiple loans per person and consolidate them all into one account. Typically they bill just for that one lump sum every month and allocate the payment accordingly. That much is fine.

However many servicers have been taking unfair advantage of this situation. When borrowers pay less than the full monthly amount, these companies have been distributing the money proportionately across each loan, resulting in all of the loans in a borrower's account becoming delinquent. The servicer then charges a late fee for every loan in the account, maximize penalties while harming the borrower's credit.

More> http://www.mainstreet.com/article/student-loan-servicers-deceived-borrowers-and-manipulated-payments-to-maximize-late-fees?puc=yahoo&cm_ven=YAHOO

[glowing]

1. If course they would try to screw over students..

Or young people just barely entering the work and debt/ credit portion of their existence... And of course, the banks somehow became exempt from bankruptcies when it comes to student loans... Probably because the young people and their demographic don't vote; so the politicians have no problem screwing over young people... Of course these politicians forget that these young people do age every year and when they are 35 and 40 still being screwed over by student loan debt, it will effect the politicians.

We are in desperate need of education and paying for higher education reform. Just think how many people we could have sent, for free, to colleges, universities, and trade schools instead of paying for costly wars in the ME? When politicians say they don't have money to spend on the citizens in hard times or in need of a leg up or in paying for educated workers of the future, and then they find the money for the MIC, they should all be thrown out of office!!! Anyone who blindly supports and authorizes military action deserves to be thrown out OR never elected again.

The priorities of the PTB and the citizens that live in this country have completely diverged. We actually may be closer to the right wing's fantasy of using 2nd amendment solutions to wrest back our country from the idiots running it into the ground. And in a scenario like that, it may not make things better or allieve the real troubles that are currently in play... It would make more sense for more of us to bring in candidates and politicians at the local level and work like hell to get the money out of politics. And those currently in charge have to realize that at some point, the scales will tip so far that it won't matter to people to try and keep up with the pretense of the American Dream; especially given the world having finite resources and climate changes that will effect so many people around the world negatively. Just think about China and their pollution issues they are facing. That country alone will have to start cleaning up its act or they will face a billion people clamping for their heads AND that would disrupt the entire world's supply structures and cheap manufacturing... Beijing alone has such horrific smog issues that it's unsafe to go outside, have the pollutions hitting one's skin, put up pictures of the sun so the people in the city know what it looks like AND next week or so, they are putting people on mandatory vacation, eliminating people's ability to travel by car, and treating the air with chemicals to try and make it look better when the world's leaders show up to have talks. Is all this worth it so a few freaks with power control issues and wealth hoarding mental disease can rule 7 billion people's lives? They really don't understand how close to "let them eat cake" moments they are!

[Live and Learn]

2. I wonder how much of this theft by financial companies

it will take before the public really demands that they be well regulated? Occupy tried to get that message across and failed to get through to even many on DU.