CONCORD, NH (AP) — U.S. Senator Maggie Hassan is calling for an investigation into whether some student loan providers are misleading millions of borrowers about their rights if they declare bankruptcy.
The New Hampshire Democrat said Saturday she signed a letter with her Senate colleagues asking for a review by the Consumer Financial Protection Bureau.
She cited a recent report from the non-profit Student Loan Protection Center which found that some lenders offering “unqualified” loans misrepresented details about how different loans can be canceled by bankruptcy. While qualifying student loans can only be canceled in cases of undue hardship, non-qualifying private loans are not subject to this requirement.
More than 2 million borrowers with unqualified loans may not have understood their rights in bankruptcy, according to the senator’s letter.
“Private student lenders have taken advantage of the widespread belief that all private student loans are non-dischargeable in bankruptcy and that lenders have marketed their non-qualified student loans under this false pretense,” the senators wrote in their letter.
The letter urges the CFPB to review the center’s findings and take appropriate action against lenders who are not transparent with borrowers.