Banks screwing students the way they screwed homeowners
Once again, family finances are in danger from big banks. Thousands of students with loans are complaining their student loan companies are breaking laws in the same way mortgage servicers did during the foreclosure crisis. That's according to a newly released Consumer Financial Protection Bureau (CFPB) report that warns of increased fees and financial trouble to come:
Lenders pay other companies, called servicers, to process loans. These subcontractors make the least money when people pay back the loan on time -- and the most when people are struggling, since the subcontractors keep all of the late fees for themselves.
CFPB's report suggests a pattern of lawbreaking by student loan servicers. And why not? Wall Street saw how profitable foreclosing
Many of the private student loan complaints mirror the problems heard from consumers in the mortgage market following the wake of the financial crisis.In the past year, CFPB received 3,800 complaints from student loan borrowers. Eight servicing companies received 87 percent of the complaints, including Sallie Mae, Wells Fargo, Citi and JPMorgan Chase.
Lenders pay other companies, called servicers, to process loans. These subcontractors make the least money when people pay back the loan on time -- and the most when people are struggling, since the subcontractors keep all of the late fees for themselves.
CFPB's report suggests a pattern of lawbreaking by student loan servicers. And why not? Wall Street saw how profitable foreclosing