The Consumer Financial Protection Bureau (CFPB) posted a blog earlier this month by John McNamara, Assistant Director of Consumer Lending, Reporting, and Collections Markets and Seth Frotman, the CFPB’s Student Loan Ombudsman, announcing that they are seeking comment on an that would look at how consumers repay student debt and track student loan industry activities relevant to consumers in financial distress. They are proposing to from the largest student loan servicers in order to inform their ongoing work to protect “at-risk” student loan borrowers.
The proposal includes looking at the following:
- The total size of the student loan market. This proposed project would seek to provide us with a more complete view of the student loan market. Currently, there is no public source for information about the private student loan market, including the number of consumers with private student loans or how these consumers manage their debt when they run into trouble. The Department of Education continues to about certain federal student loans, publishing basic, summary information about the number of consumers that take out these loans to pay for college and how consumers manage this debt. This proposed project would build on the Department of Education’s work to give us a better understanding and a more complete view of the student loan market as a whole.
- Borrowers with federal student loans who seek to repay their loans based on how much money they make (known as Income-Driven Repayment or IDR plans). We’ve highlighted the many servicing roadblocks that borrowers may face as they struggle to access or keep an affordable, income-driven payment. This proposed project would provide the Bureau key data on the number of borrowers who apply to enroll in or recertify their income and family size under these plans and the outcomes of these efforts.
- Borrowers who face the greatest risk of default. We know that certain borrowers, including those who did not complete their degree and those who recently defaulted on a student loan, may be at higher risk of future distress. Last year, the Department of Education, in consultation with the Bureau and the Department of the Treasury, called for new servicing reforms as part of a for student loan servicing. This data would help provide insight on how servicers are helping the most vulnerable borrowers and keeping borrowers on track for long-term success.
- Borrowers with private student loans who experience financial distress. Distressed private student loan borrowers tell us that their student loan servicers provide little information or help when borrowers experience trouble keeping up with their monthly payment, and that they struggle to gain access to affordable loan modification options. Data provided through this proposed initiative would help us understand the range of options private student loan servicers make available to borrowers when they face student debt distress.
You can see the full proposal and Request for Information here. Written comments must be received by April 17, 2017.