SoFi Response to CFPB Inquiry on Student Loan Servicing Practices
The following is SoFi’s response to the CFPB regarding its recent inquiry into student loan servicing practices.
Thank you for the opportunity to provide our perspective on ways to improve student loan servicing practices. We applaud the CFPB for opening this inquiry. We feel strongly that loan servicers should be required to provide timely information to borrowers and lenders seeking to provide refinancing opportunities. As the largest provider of student loan refinancing, at SoFi we have identified problems in getting timely information from servicers that make it difficult for borrowers to refinance and obtain a lower interest rate on their student loans. Following are our top three recommendations, which prioritize the borrower – and the borrower’s long-term success.
* To start, the CFPB should allow borrowers to lodge complaints against federal student loan servicers through its online portal. Today, this option is only available for private loan servicers. The entire industry would benefit from the value of the CFPB’s reporting on not only private but, federal, servicers as well. Identifying pain points regardless of loan origination is critical to understanding the system’s flaws and how they can be fixed.
* Second, servicers should be required to provide easy pay-off instructions to borrowers and make the details readily available to them. Many servicers today make it extremely complicated for borrowers to get their pay-off information. It’s been so problematic for borrowers that we had to develop a program called Pay-Off Assist, where we will walk a borrower through the process of getting their pay-off information, regardless of servicer. As part of Pay-Off Assist, we created a guide for our customer service team that enables them to walk a borrower through the process of getting pay-off information from any servicer. This should not be necessary. Servicers should be held accountable for making pay-off information readily available; it increases transparency, provides for a seamless experience and improves customer service. This should be table stakes, yet it’s not today.
* Third, the CFPB should require that loan servicers adopt the use of existing technologies to increase the speed of their transactions. Today, several servicers require that paper checks be issued for loan pay-offs. Servicers requiring paper checks are extremely slow in processing student loan payoffs. The long processing times often confuse borrowers and at times overlaps with when payments are due, leaving borrowers uncertain if they should make a payment or not. This is a critical issue because late payments on student loans severely impacts a consumer’s credit; it also causes undo stress on borrowers. Given today’s technology, secure transaction methods — such as ACH — are just one way to improve the borrower experience…and at the same time, emerge from the dark ages.
At SoFi, we believe that fairness and transparency are critical factors in our partnership with borrowers. Given that we were the first company to refinance federal and private loans – and just surpassed $3 billion in funded loans — we know this model works. We encourage the CFPB to hold these servicers accountable for their practices and prove they are making tangible steps to improve the borrower experience in a meaningful way.
Thank you again for helping to bring these much-need conversations to the forefront of today’s student debt crisis. We’re doing our part. Let’s make sure everyone else does, too.
CEO, SoFi Inc.