Private Services Adjust to Their Needs When Students Prepay Loans

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Private Services Adjust to Their Needs When Students Prepay Loans

Sep, 27th 2016

Stories of borrowers scrimping and saving to throw more than the minimum monthly payment at their student loans are often celebrated as evidence that if you put your mind to it, you too can rid yourself of your student loans relatively quickly.

But the nation’s consumer watchdog warned Monday that the private companies managing the student loan payment process are making that harder.

The Consumer Financial Protection Bureau, or CFPB, has been receiving complaints from borrowers who say that after they intentionally overpaid on their student loans in an effort to lower the principal on the loan, their servicer lowered their monthly payments and stretched out their repayment term without their knowledge, the bureau’s student loan ombudsman, Seth Frothman, wrote in a blog post Monday.

That means that if these...

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