Watchdog Urges Caution Over Private Student Loan Practices

Law360, New York (October 16, 2012, 4:50 PM EDT) -- The $150 billion private student loan market is plagued by poor servicing practices mirroring those that undermined the mortgage industry, a Consumer Financial Protection Bureau watchdog said Tuesday, asking the Obama administration to explore whether reforms that benefited homeowners might also help college graduates.

The CFPB's student loan ombudsman — which doesn't speak for the bureau — said it has received nearly 3,000 complaints since first soliciting feedback in March, and that a recurring theme was criticism of third-party vendors that lenders hire to collect payments,...
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