By Lisa M. Goolik, J.D.
The Consumer Financial Protection Bureau is soliciting feedback on three "Payback Playbooks" that are intended to inform student loan borrowers of their repayment options. The bureau will use the feedback when considering potential options to improve written communications made to student loan borrowers by student loan servicers, and may be used to inform the development of certain disclosures required of the Department of Education. Comments are due by June 12, 2016.
Growing debt and delinquencies. The bureau estimates that approximately 42 million Americans owe student loan debt, and a quarter of those borrowers are delinquent or in default. By the end of the first quarter of 2016, outstanding federal student loan debt rose to more than $1.2 trillion.
To address the issue, the bureau, along with the Department of Education and the Treasury Department, developed a vision for market-wide reform, including an emphasis on the importance of accurate and actionable information for borrowers seeking to make decisions about student loan repayment.
In early 2016, the bureau engaged in a series of structured interviews with individual student loan borrowers in order to better understand the barriers student loan borrowers face when repaying their loans, and to identify opportunities for improving borrower communications about repayment options.
The agencies learned that inconsistent and incomplete information from servicers can be a direct impediment to successful repayment. Borrowers noted that current written communications often do not provide the information necessary to make informed decisions about various repayment options.
Student loan servicers complained that the expansion of income-driven repayment plans and other alternative options creates challenges for servicers seeking to counsel borrowers about how to navigate loan repayment. The bureau also noted that a trade association representing the student loan servicing industry observed that the breadth of options available to consumers is “so confusing as to be counter-productive."
'Payback Playbooks.' The interviews led to the development of a series of potential borrower "Payback Playbooks," which are intended to inform borrowers of their repayment options. The bureau is seeking comments discussing how the three proposed playbooks— Payback Playbooks A, B, and C—could affect borrowers when evaluating available alternative repayment plans and facilitate enrollment in alternative repayment plans, when appropriate.
Feedback needed. The bureau is seeking general feedback on the playbooks, as well as responses to specific questions related to the draft playbooks and the general communication of information related to student loans.
Comments, identified by Docket No. CFPB- CFPB-2016-0018, may be sent to Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street, NW, Washington, D.C. 20552, or electronically through www.regulations.gov.
For more information about the CFPB's student loan initiative subscribe to the Banking and Finance Law Daily.
