There’s some good news on the horizon for student loan borrowers: The Consumer Financial Protection Bureau (CFPB) is on the case. The CFPB announced that it was going to crack down on student loan servicers and make sure they are helping those who qualify for loan forgiveness.
The crackdown was sparked when the CFPB found that some servicers were purposely deceiving borrowers about who qualified for forgiveness. As CNBC notes, the forgiveness plan allows nonprofit and government employees to have their loan balances erased after 120 payments or 10 years. In October of 2021, the Biden administration extended the plan to those who missed out on it previously. Now those borrowers have to apply by this October in order to be eligible.
For borrowers, the loan forgiveness process can be quite tricky. For some, in order to qualify, they need to first consolidate their loan into a different type of loan — called a Direct Loan — and then they can submit their application for forgiveness.
The CFPB is rightly concerned that some servicers are going to make the process even more complicated than it already is. To that end, the CFPB is focusing on a few areas: If servicers give accurate information about the forgiveness process, if the companies have proper tools for identifying borrowers who qualify for forgiveness, and if they’re promoting the program to the borrowers who can have their loans erased.