<p>"As if student loan borrowers needed more bad news, the Consumer Financial Protection Bureau released a report this week detailing how some student loan servicers have tricked consumers into paying higher fees and misrepresented balances due." ...</p>
<p>One can be either be forced or not. Being tricked means that one decided to do whatever at his own will, nobody has forced him. If one decided to act on his own will, then one should expect to bare consiquences of his decision.
There is a totally different concern floating in a country when IRS comes and re-possess your money without any charge or criminal activity at all on your part. Yes, there is a law and they can do it and you cannot get it back. Some people lost few hundereds of thousands, life long savings. I am very concerned with this. But if one will try “to trick” me into something, I would advice not to waste their time in futile attempt.</p>
<p>“Examiners for the CFPB found that from March to June 2014 some student loan servicers took part in several illegal and shady practices including inflating borrowers’ minimum payments, made illegal collection calls and charged unlawful late fees.”</p>
<hr>
<p>I have a huge problem with this. These servicers have exclusive contracts granted to them by the Department of Education. There is an expectation that they will play by the rules. </p>
<p>“There is an expectation that they will play by the rules.” - These expectations are for the tax paying citizens, not for the government agencies. They are excluded from all of what we have to follow. As a newsest example - they do not participate in Obamacare, all requirements are waved for government employees. Remember, we are serving the government, not the otherway around, we exist to serve them.</p>
<p>It really troubles me the way lending for education has become such big business. It really bothers me that allegedly non profit schools pay administrators so much money that has been borrowed by our next generations. It is a huge reason for the lack of class mobility that has set in in this country. </p>
<p>The CFPB is a fairly new (2010) agency. It has really only been investigating this type of business (non-bank servicing) for 2 years. It found these violations. Now the servicers must answer the charges. Believe me, this is not new activity, just a new agency, with some teeth, doing the auditing.</p>
<p>
</p>
<p>Reviewing the article, ‘trickery’ is kind of a strange word to use for some of these allegations. If someone charges you a fee when they have signed a contract not to charge you a fee, that’s not really a ‘trick’, that’s just taking money that they are not entitled to have. If a cable bill provider charged you a late fee when you weren’t late (according to your contract with them), were you really ‘tricked’ or did they just take your money?</p>
<p>There were some instances of genuine deception alleged in the report, but even those cases are hardly justifiable conduct.</p>
<p>
</p>
<p>I think this is overly simplistic. There are a lot of ways to unethically trick people into doing things, like giving misleading or incomplete information, withholding information, and coercion. In this case, some of the lenders were charging unlawful fees that were actually against their own agreement with the borrower - if the borrower paid during the grace period, during which they were explicitly told that there were no late fees, they would be charged late fees anyway. Or the servicer would apply loan payments in such a way as to maximize the amount of late fees they were charged (much like banks will re-order your incoming charges so they can maximize the NSFs they can charge you).</p>
<p>Then there’s what @DmitriR said, which is that a lot of this is not trickery but outright illegal stuff.</p>
<p>
</p>
<p>This is pretty irrelevant to the discussion at hand but this statement is not true. First of all, I’m not really sure what “participate in Obamacare” means, since what’s normally referred to as “Obamacare” is really a law that sets forth provisions for people to purchase health insurance and not an insurance plan itself. But if you are referring to the individual mandate, government employees are not exempted from the requirement to carry health insurance. In fact, Congress members are allowed a subsidy to purchase health insurance on the exchanges (for a very specific reason).</p>
<p>And the servicers are not government entities … they are contracted by ED to service loans, but they are private companies. They are supposed to play by the rules or be replaced by a company that will. I get so frustrated when borrowers are given incorrect information … the allegations in this article are much worse than things like recommending forbearance when the best course is enrolling in IBR. It’s time to replace the servicers that serve themselves rather than borrowers.</p>