Consumer agency opens inquiry on student loan services



Estimated read time: Less than a minute

This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

WASHINGTON (AP) — Do companies servicing student loans make more money when they provide less service?

The federal government's consumer watchdog wants to see what changes can be made to help the 40 million people with student loan debt save money and avoid default.

The Consumer Financial Protection Bureau is opening a public inquiry Thursday into student loan servicing practices that it says can make paying back loans "stressful or harmful."

Loans are often serviced by companies that process monthly payments, assist borrowers with repayment options if they lose their jobs, and perform other tasks.

The federal agency's director, Richard Cordray, says that student loan servicers often make more money when they spend as little time as possible on each account, and typically get paid more when a borrower is in repayment longer.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Kimberly Hefling

    SIGN UP FOR THE KSL.COM NEWSLETTER

    Catch up on the top news and features from KSL.com, sent weekly.
    By subscribing, you acknowledge and agree to KSL.com's Terms of Use and Privacy Policy.

    KSL Weather Forecast