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From Banking and Finance Law Daily, September 24, 2014

CFPB, Peace Corps pledge to tackle student loan debt

By Katalina M. Bianco, J.D.

The Consumer Financial Protection Bureau has entered into a pact with the Peace Corps, AmeriCorps, an initiative of the Corporation for National and Community Service (NCSC), and the Department of Education to help public servants and national service participants reduce their student loan debt. The agencies are among the first federal agencies to take CFPB’s public service pledge on student debt.

“I believe we are standing at a precipice when it comes to student loan debt in this country,” CFPB Director Richard Cordray said. “That load has reached $1.2 trillion, second only to mortgages as a category of consumer finance.” Cordray said the burden is rapidly growing and affects not only the debtors but the economy as a whole.

Peace Corps Director Carrie Hessler-Radelet noted that student loan debt “is a significant factor for many young people considering public service, including Peace Corps volunteers, so it is incumbent upon us to help educate them on the benefits available.”

“Given that more than 60 percent of AmeriCorps alums go into public service careers, it’s important they know about options that can help them reduce their student debt,” said NCSC CEO Wendy Spencer.

Service pledge. The Peace Corps and AmeriCorps have pledged to talk to employees about their options for student loan forgiveness, verify that they work for a public service organization, and check in with them annually to make sure they stay on track. Eligible public servants can, and should, sign up for the loan forgiveness provided by federal law, Cordray said.

Through the pledge, the Peace Corps and NCSC commit to share information about options for managing student loan debt with applicants, volunteers, and employees. In partnership with the Department of Education and the bureau, the Peace Corps launched a web portal http://www.peacecorps.gov/loans and public education campaign to help current, future, and returned volunteers understand the benefits that may be available to them to help manage their student loans if they choose public service.

Bureau guidance. As part of the initiative, the CFPB has developed customized guides for members of the militaryPeace Corps volunteers, and participants in national service programs that have student loan debt. The bureau also created toolkits for employers to guide public service employers who are assisting employees with available options.

A bureau blog post provides advice for borrowers in terms of available options and points borrowers to Ask CFPB, a tool available on the CFPB website, for further information and answers to specific questions about student loans.

Companies: Corporation for National and Community Service; Peace Corps.

MainStory: TopStory CFPB CommunityDevelopment Loans

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