07/08/2015

Student debt horror stories go viral

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A new database of horror stories about unpaid student loan debt is giving collective voice to victims of corrupt student-debt collectors, shining a light on repeat offenders and helping others avoid them.

Abusive collectors of student debt—and there are many—range from those who dramatically inflate the amount owed, to those who hound people for debts they've already paid. At Twitter's #studentdebtstress, and on the Consumer Finance Protection Bureau's database of debt complaints, people describe collection agencies that have illegally removed federal loans from deferment, seized inaccurate payments from tax returns and canceled automatic payments without notification. Debtors tell of endless telephone calls—56 in one week, by one person's account—harassing them to pay up. They've been charged unfair and incorrect fees based on debt collectors' accounting errors, and threatened with low credit ratings based on false information.

The stories are not just an opportunity to air frustrations. Instead, suggests the CFPB, "one complaint can help millions" by warning other consumers about bad actors among the collection agencies. The database of complaints is searchable, so consumers can look up particular agencies or particular kinds of loans. Personal information is redacted.

More than 40 million Americans owe money on their student loans, and the CFPB notes that such debt can delay home purchases, marriage and children, and retirement. Even grandparents are suffering from student loan fallout. Student debt among older Americans has grown from $3 billion to $18 billion in the last eight years, according to the CFPB; more than a quarter of federal loans owed by borrowers ages 65-74 are in default.

Older people are haunted by loans they took out decades ago, loans for courses taken during mid- or late-career switches, or loans taken to educate their children or grandchildren. Some are having their Social Security checks withheld and, like people of every age, they are being harassed and abused by debt collectors in numerous ways.

The CFPB is collecting stories through July 13 at FederalRegisterComments@cfpb.gov. If you've run into roadblocks—payment processing problems, servicing transfer snags or communication confusion—while trying to pay off student loans, officials there want to know.

[Virginia Myers]