Given that over 40 million youngsters have student loan debt, this may be a significant development in ensuring that students are treated fairly. At the least, it vindicates the decision for the Consumer Financial Protection Bureau to take a strong role in the area, which covers roughly $1.2 trillion in current loan balances. The Huffington Post reports that “dodgy practices” are common in the industry.
“As a growing share of student loan borrowers reach out to their services for help, the problems they encounter bear an uncanny resemblance to the situation where struggling homeowners reached out to their mortgages servicers before, during, and after the financial crisis,” according to the Consumer Financial Protection Bureau Director Richard Cordray. He continued that the Consumer Financial Protection Bureau has concerns that this is contributing to the growing problem of student loan defaults.
The Huffington Post notes that student loans are second only to household mortgages as the largest source of household debt in the country, and they have roughly doubled since 2008. The growing amount of debt that graduating students now hold is preventing them from forming households, buying cars, and otherwise contributing to the consumer society. Analysts believe that this is one of the reasons why the country has been so slow in recovering from the 2008 Great Recession. With nearly 8 million Americans currently in default on their student loans, according to the Huffington Post, and millions more delinquent or otherwise delaying payments
, there is a significant drag on the country’s economic growth.