Today, the Consumer Financial Protection Bureau (CFPB), the U.S. Department of Education and the U.S Treasury unveiled many new initiatives to student loan borrowers geared towards paying back their student loans as well as improve servicing practices. The highlight among these initiatives is the CFPB’s Payback Playbook.
The Payback Playbook will play a significant role in providing repayment options for borrowers. Not only will it present a set of prototype disclosures for loan services to communicate with borrowers, it will also provide borrowers with personalized information about their loan repayment options.
“The Payback Playbook is just the latest action the bureau is taking to address the most urgent problems identified by consumers, student loan servicers, consumer advocates and borrowers themselves. We are working with our partners at [the Department of] Education and Treasury to understand these problems and develop needed reforms in student loan servicing,” CFPB Director Richard Cordray said, adding that the CFPB has made it a priority to stamp out illegal servicing practices.
Out of the 42 million borrowers with student loan debt, one in four find it difficult to stay current on their student loan debt despite the various income-driven repayment options available.
A report released by the Government Accountability Office (GAO), indicated that 70 percent of federal Direct Loan borrowers defaulters earned incomes that made them eligible for income-based repayment (IBR) options.
“This tells us that millions of borrowers may be failing to receive critical information about repayment options or are encountering communication breakdowns when they try to enroll,” Cordray said.
The Payback Playbook will appear on borrowers’ on all correspondences between student loan servicers and borrowers. It will personalize repayment options in simple language tailored for the borrower’s specific needs. The CFPB is requesting public feedback pertaining to the new initiatives. To provide feedback, click here.