Oregon Division of Financial Regulation releases first-ever student loan report

(The Center Square) – The Oregon Division of Financial Regulation released its inaugural student loan report this week, highlighting the intricacies of the state’s student loan landscape and how the newly-established student loan ombuds will impact the state.

The report comes at the direction of the Oregon legislature, which approved the creation of a student loan ombuds position in 2021, according to a press release from the Oregon Division of Financial Regulation.

State law requires an annual ombuds report sent to the legislature outlining the work down by the position. It highlights the challenges student loan borrowers face and how changing regulations and policies have created confusion among borrowers.

“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,” Lane Thompson, the state’s ombuds, 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.”

The report looked at many facets of student loan borrowing.

It noted that the division received 34 complaints to the student loan ombuds process; Thompson resolved 21 complaints and is currently dealing with others.

“The report underscores the need for streamlined communication between borrowers and servicers to foster quicker resolutions,” the release said.

About one-fourth of complaints fielded dealt with federal student loan forgiveness or cancellation programs. Those complaints revolved around shifting policies that are confusing for borrowers.

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

Additionally, the report noted how changing regulations confuse borrowers and said there must be efforts to inform the public on such matters.

Thompson explains in the report that she regularly holds in-person and virtual education seminars and tables at community events. She also made a student loan resource on the division’s website that people can access here.

“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 also recommends the Oregon legislature make these changes to improve the student loan landscape in the state:

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.