An article by The New York Time’s Hannah Steinhardt this week outlined three things students should know when considering private loans. According to her, the Consumer Financial Protection Bureau has published these findings in a recent report, but I can’t figure out what about them is news.
1.”A borrower can easily end up in trouble having not realized the full amount of repayment that is necessary. Among other surprises that borrowers have reported: not knowing the full terms and conditions of their loans, accounts being sold or otherwise changing hands, automatic — and unauthorized — payments, and unexpected fees.”
This is what I feel is a major cause of the student debt crisis. It is a student’s job to read and understand the promissory note that accompanies a loan. The terms and amount of a loan should not be a surprise. If a student isn’t responsible enough to know the terms of a major loan, they shouldn’t be taking one out at all.
2. “Former college students have complained about getting the runaround from servicers of their private loans. Borrowers say that the loan servicers are not always easy to communicate with, and that they’ve had a hard time getting assistance. Borrowers have also reported that some loan servicers have less than ideal record keeping.”
This is an understandable concern for students. Hopefully borrowers keep their own records, but it should still be a lender’s responsibility to maintain accessible records.
3.”Borrowers find themselves locked into loan terms, which can be disastrous as graduates navigate the job market and struggle to find steady work.”
Locked in terms are standard for loans. That’s part of why it’s such a risk, because there is no guarantee, especially in this job market, that steady work is attainable.
Overall, I was disappointed by this study conducted by our own government. These findings were not substantial or newsworthy, and I’m surprised the New York Times decided to publish them as such.