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Oregon Division of Financial Regulation releases first student loan report: Addressing challenges and providing solutions

Aug. 10, 2023

Salem – The Oregon Division of Financial Regulation (DFR) has released its inaugural student loan report, shedding light on the intricacies of the state's student loan landscape and the role of the newly established student loan ombuds. This report is a direct result of the Oregon Legislature's innovative decision to establish the student loan ombuds position in 2021, demonstrating the state's commitment to addressing the complexities surrounding student loans. 

As required by ORS 725A.530, the student loan ombuds report is due yearly to the Legislature and highlights the work of the student loan ombuds, Lane Thompson, who was hired in June 2022. The report illustrates the challenges faced by borrowers and emphasizes the confusion caused by evolving regulations and policies.

“A lot of times, when I get a response from the servicers, it's 80 pages and each response takes a long time to go through and understand," Thompson said. “If it takes a long time for me, and is confusing, imagine what it's like for the borrowers. Usually, by the time someone files a complaint, it has gotten complicated."

Some highlights of the report:

Navigating confusion: The report emphasizes the profound changes that are reshaping the student loan landscape, leading to considerable confusion among borrowers. The division received 34 complaints through the student loan ombuds office. Thompson resolved 21 of those complaints, while some are still in process. The report underscores the need for streamlined communication between borrowers and servicers to foster quicker resolutions. 

Focus on federal loan forgiveness/cancelation: About 25 percent of the complaints received were associated with federal student loan forgiveness or cancellation programs. The report points to the dynamic nature of these programs, with frequent policy shifts leading to a challenging environment for borrowers seeking clarity.

“It's a moving target," Thompson said, referring to federal student loan forgiveness programs. “Everything changes, sometimes daily, which leads to a lot of confusion among borrowers."

Education and outreach: The report draws attention to the challenges arising from shifting regulations. As rules change, consumers face confusion and uncertainty, highlighting the necessity of consistent and accessible communication regarding evolving policies. 

The report explains that Thompson regularly hosts both in-person and virtual education seminars and tables at community events. She has also created student loan resources on the division's website at https://dfr.oregon.gov/help/student-loan-help.

“The main focus areas include clarifying the nuances of different forgiveness programs and repayment plans, as well as educating borrowers about the new requirement for student loan servicers being licensed with the state," she said.

The report contains a series of recommendations to the Oregon Legislature, aimed at improving the student loan landscape for all borrowers. These include: 

  • Increased subsidies for higher education: The report advocates bolstering subsidies to enhance access to higher education, including promoting affordability and equitable opportunities for all students. 
  • Caps on garnishments: The report suggests the introduction of caps on garnishments for defaulted loan collection to protect borrowers from overly burdensome repayment obligations. 
  • Enhancements to servicing laws: The report proposes updates to current student loan servicing laws, mandating servicers to respond to borrower requests within a specific time period, and providing more information within monthly statements. This includes transparent disclosure of how payments are applied to various components of borrowers' loans. 

As the first student loan report is released, it calls attention to the state's commitment to addressing the complexities surrounding student loans and empowering borrowers with the tools they need to make informed decisions. The division's efforts, coupled with the active role of the student loan ombuds, represent a significant stride toward creating a fairer and more transparent student loan landscape.

“We have a lot of work to do in undoing all the confusion in the student loan space," said TK Keen, administrator for DFR. “Creating this position was forward thinking by the legislature, and the work that Lane has done in this first year has been tremendous."

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About Oregon DFR: The Division of Financial Regulation is part of the Department of Consumer and Business Services, Oregon's largest business regulatory and consumer protection agency. Visit dfr.oregon.gov and  www.dcbs.oregon.gov.