Private student loan lenders and servicers who met last week with CFPB Director Cordray, Education Secretary Arne Duncan, and Acting Deputy Treasury Secretary Mary Miller got the “memo” that the regulators think they should be doing more to expand refinancing opportunities for private student loan borrowers. The meeting was the subject of a blog post published by Rohit Chopra, the CFPB’s Student Loan Ombudsman. Observing that “[m]any of the financial institutions represented in [the] meeting received extraordinary assistance from federal government programs when they faced their own financial distress,” Mr. Chopra cited the complaints the CFPB has received from private student loan borrowers about their inability to negotiate a repayment plan.
Like previous comments made by Mr. Chopra, his blog post references the “more than 850,000 private student loans in default” without any recognition of the significant amount of student loan debt attributable to federal loans and the rise in federal student loan default rates. In fact, based on the CFPB’s own figures, more than 6 million borrowers on federal student loans are in default.