The government’s consumer watchdog is adding its voice to a growing chorus of warnings about problems with a federal program that permits people who take public service jobs to have their student loans forgiven after a decade, the New York Times reported today. Confusing rules, bureaucratic tripwires and outright errors are hindering thousands of people as they try to take advantage of the program, according to a report released yesterday by the Consumer Financial Protection Bureau. These are people who teach, serve in the military or work for a nonprofit organization, for example. The volume of complaints is especially alarming because the program has not yet reached its first milestone: forgiving debts. Created in 2007, the program requires borrowers to do 10 years of service before any federal student loan debt is eliminated. The first wave of qualifying borrowers can submit applications in October. But hundreds of complaints in the last year indicate many applicants are encountering obstacles, the agency said. Read more.
In related news, Federal Reserve chairwoman Janet Yellen weighed in on one of the more contentious financial policy debates in Congress in a private conversation, a lawmaker said yesterday, and suggested that Congress should change the way that the Consumer Financial Protection Bureau is funded, the Washington Examiner reported today. Currently, the consumer agency is funded by Yellen's agency, which earns income through its portfolio of government bonds. Republicans critical of the agency's mission have argued that the arrangement prevents them from exercising authority over the bureau by controlling its spending. However, Rep. Blaine Luetkemeyer (R-Mo.) said yesterday that Yellen had questioned that arrangement during a recent conversation with him over breakfast. Read more.