Request for Information Regarding Student Loan Borrower Communications, 26529-26534 [2016-10327]
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Federal Register / Vol. 81, No. 85 / Tuesday, May 3, 2016 / Notices
BUREAU OF CONSUMER FINANCIAL
PROTECTION
[Docket No. CFPB–2016–0018]
Request for Information Regarding
Student Loan Borrower
Communications
Bureau of Consumer Financial
Protection.
ACTION: Notice and request for
information.
AGENCY:
The Bureau of Consumer
Financial Protection (Bureau or CFPB) is
seeking comments from the public
related to consumer decision-making
when repaying student loans, including
the presentation of information about
alternative repayment options. The
submissions to this request for
information will assist policymakers
and market participants when
considering potential options to
enhance, supplement, or revise written
communications made to student loan
borrowers by student loan servicers,
related to repayment options. The
Bureau is seeking public comments
about how these communications could
reduce defaults, improve borrower
outcomes, and spur innovation.
DATES: Comments must be received on
or before June 12, 2016.
ADDRESSES: You may submit comments,
identified by Docket No. CFPB–2016–
0018, by any of the following methods:
• Electronic: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email: FederalRegisterComments@
cfpb.gov. Include Docket No. CFPB–
2016–0018 in the subject line of the
message.
• Mail: Monica Jackson, Office of the
Executive Secretary, Consumer
Financial Protection Bureau, 1700 G
Street NW., Washington, DC 20552.
• Hand Delivery/Courier: Monica
Jackson, Office of the Executive
Secretary, Consumer Financial
Protection Bureau, 1275 First Street NE.,
Washington, DC 20002.
Instructions: All submissions should
include the agency name and docket
number for this proposal. Because paper
mail in the Washington, DC area and at
the Bureau is subject to delay,
commenters are encouraged to submit
comments electronically. In general, all
comments received will be posted
without change to https://
www.regulations.gov. In addition,
comments will be available for public
inspection and copying at 1275 First
Street NE., Washington, DC 20002, on
official business days between the hours
of 10 a.m. and 5 p.m. eastern time. You
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SUMMARY:
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can make an appointment to inspect the
documents by telephoning (202) 435–
7275.
All comments, including attachments
and other supporting materials, will
become part of the public record and
subject to public disclosure. Sensitive
personal information, such as account
numbers or social security numbers,
should not be included. Comments
generally will not be edited to remove
any identifying or contact information.
For
general inquiries, submission process
questions, or any additional
information, please contact Monica
Jackson, Office of the Executive
Secretary, at 202–435–7275.
FOR FURTHER INFORMATION CONTACT:
Authority: 12 U.S.C. 5511(c).
This
Request for Information Regarding
Student Loan Borrower
Communications seeks feedback from
the public on a series of potential
borrower communications—Student
Loan Payback Playbooks—developed by
the Bureau in coordination with the
Department of Education and the
Department of the Treasury. The Bureau
also seeks public comment about the
role that written communications play
in enabling successful student loan
repayment.
The submissions to this request for
information may assist market
participants and policymakers when
considering potential options to
enhance, supplement, or revise written
communications provided to student
loan borrowers, related to repayment
options. Submissions will further
inform stakeholders’ understanding of
the relationship between written
communications and borrower decisionmaking related to student loan
repayment, particularly as a means to
reduce delinquencies and defaults.
Comments submitted in response to this
request for information may also be
used to inform the development of
certain disclosures required of the
Department of Education by the
Presidential Memorandum on a Student
Aid Bill of Rights, signed on March 10,
2015.1 The deadline for submission of
comments is June 12, 2016.
The Bureau encourages comments
from the public, including:
• Student loan borrowers;
• Organizations representing students
and student loan borrowers;
SUPPLEMENTARY INFORMATION:
1 See The White House, Presidential
Memorandum—Student Aid Bill of Rights (Mar. 10,
2015), available at https://www.whitehouse.gov/thepress-office/2015/03/10/presidential-memorandumstudent-aid-bill-rights.
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• Innovators, technology providers,
and recent entrants into the student loan
market;
• Institutions of higher education and
affiliated parties;
• Financial services providers,
including but not limited to lenders and
servicers in the student loan market;
• State law enforcement agencies and
regulators;
• Participants in the consumer data
industry, including credit reporting
agencies;
• Debt collectors;
• Organizations promoting financial
education;
• Civil rights groups; and
• Nationally recognized statistical
rating organizations.
Please note that the Bureau is not
soliciting individual student account
information in response to this notice
and request for information, nor is the
Bureau seeking personally identifiable
information (PII) regarding student
accounts.
All comments, including attachments
and other supporting materials, will
become part of the public record and
subject to public disclosure. Sensitive
personal information, such as account
numbers or social security numbers,
should not be included. Comments
generally will not be edited to remove
any identifying or contact information.
Part A: Accurate and Actionable
Information Related to Student Loan
Repayment
In May 2015, the Bureau, in
coordination with the Department of
Education and the Department of the
Treasury, launched a public inquiry into
student loan servicing practices that
sought input from the public related to
potential barriers to student loan
repayment. A broad cross-section of
respondents, including consumers,
student loan servicers, consumer
advocates, and others, highlighted the
lack of information regarding student
loan repayment options as one of the
potential barriers to borrower success.2
Commenters emphasized that accurate
and actionable information about
various consumer protections and
borrower benefits could improve
borrower decision-making.3
2 See, e.g., Borrower Comment, CFPB–2015–0021–
0076 (‘‘[M]onthly statements are the most
convoluted statements I’ve ever seen in my entire
life. I work in the banking industry and I struggle
each month to figure out what I’m supposed to be
paying.’’); Comment from Axis Financial Services,
CFPB–2015–0021–0374 (‘‘Most defaulted borrowers
need to hear about the opportunity and benefits of
rehabilitation, affordable income-based repayment
options, procedures for setting up a rehabilitation
and answers to any questions the borrowers may
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Federal Register / Vol. 81, No. 85 / Tuesday, May 3, 2016 / Notices
Approximately 42 million Americans
owe student loan debt.4 In less than a
decade, the volume of outstanding
federal student loan debt has more than
doubled, rising from $516 billion in
2007 to greater than $1.2 trillion in the
first quarter of 2016,5 surpassing all
other categories of consumer debt aside
from mortgages.
Unlike other types of consumer debt,
which have realized reduced levels of
delinquency and default compared to
highs reached following the Great
Recession, the student loan market
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have.’’); Comment from The Institute for College
Access & Success, CFPB–2015–0021–0356
‘‘[B]orrowers cannot count on servicers to provide
information and assistance that could help them
make affordable payments and stay out of
default.’’); Comment from Pennsylvania Higher
Education Assistance Agency, CFPB–2015–0021–
0974 (‘‘While most borrowers are served well by
customer service agents that are versed in a wide
variety of student loan programs and options, some
borrowers need the assistance of specially trained
teams of representatives who can provide
specialized information and counseling.’’).
3 See, e.g., Borrower Comment, CFPB–2015–0021–
0996 (‘‘Re-payment options are not clearly stated
. . . Servicers should include what my monthly bill
payments would be if I’m considering different
payment options.’’); Borrower Comment, CFPB–
2015–0021–6521 (‘‘I have dealt with several loan
servicers and received inconsistent and erroneous
answers to common questions. . . .
[R]epresentatives would scream at me over the
phone that I owed a substantial amount of money
immediately, more than I could possibly afford to
pay. I would have to hang up and call again hoping
to get a representative that was more reasonable.
The next representative would tell me something
completely different. . . . They told me I do not
qualify for Income-Based Repayment because I have
Grad Plus Loans . . . This information is
completely false, this restriction only applies to
Parent Plus loans which I do not have and I do not
exceed any income restrictions . . . . This false and
inconsistent information led me to defer payments
when I could have been making them under IBR.’’).
4 See U.S. Department of Education, Federal
Student Aid Portfolio Summary (accessed on Apr.
12, 2016), available at https://studentaid.ed.gov/sa/
sites/default/files/fsawg/datacenter/library/
PortfolioSummary.xls.
5 See U.S. Department of Education, Federal
Student Aid Portfolio Summary (accessed on Apr.
12, 2016), available at https://studentaid.ed.gov/sa/
sites/default/files/fsawg/datacenter/library/
PortfolioSummary.xls.
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continues to show signs of distress.6
The Bureau estimates that a quarter of
student loan borrowers are, collectively,
either delinquent or in default on
approximately $200 billion in student
debt.7 Elevated levels of student loan
borrower distress exist despite the
availability of a range of protections for
borrowers that are designed to mitigate
delinquency and default, including
income-driven repayment plans
provided for by law for the vast majority
of borrowers with federal student
loans.8 Given the growing share of
consumers managing student loan debt,
6 See Federal Reserve Bank of New York,
Quarterly Report on Household Debt and Credit
(Aug. 2015), available at https://
www.newyorkfed.org/householdcredit/2015-q2/
data/pdf/HHDC_2015Q2.pdf.
7 U.S. Department of Education, Federal Student
Loan Portfolio: Direct Loan and Federal Family
Education Loan Portfolio by Loan Status (accessed
on Apr. 12, 2016), available at https://
studentaid.ed.gov/sa/sites/default/files/fsawg/
datacenter/library/PortfoliobyLoanStatus.xls; U.S.
Department of Education, Federal Perkins Loan
Program Status of Default as of June 30, 2015 (Mar.
17, 2016), available at https://ifap.ed.gov/
eannouncements/031716PerkinsCDR1415.html;
U.S. Department of Education and Consumer
Financial Protection Bureau, Private Student Loans
(July 2012), available at https://
www.consumerfinance.gov/reports/private-studentloans-report/; U.S. Department of Education,
Federal Student Loan Portfolio: Direct Loan
Portfolio by Delinquency Status (accessed on Apr.
12, 2016), available at https://studentaid.ed.gov/sa/
sites/default/files/fsawg/datacenter/library/
DLPortfoliobyDelinquencyStatus.xls; U.S.
Department of Education, Federal Student Loan
Portfolio: ED-Held FFEL Portfolio by Delinquency
Status (accessed on Apr. 12, 2016), available at
https://studentaid.ed.gov/sa/sites/default/files/
fsawg/datacenter/library/
EDHeldFFELPortfoliobyDelinquencyStatus.xls.
8 Readers should note that access to IncomeBased Repayment (IBR), Pay As You Earn (PAYE),
and Revised Pay As You Earn (REPAYE) is limited
to borrowers with federal loans used to finance
their own education. Parents with federal student
loans made under the Parent PLUS program may
use another income-driven repayment plan,
Income-Contingent Repayment (ICR), but must first
refinance any parent loans into a new Direct
Consolidation Loan in order to be eligible. See U.S.
Department of Education, Income-Driven Plans,
available at https://studentaid.ed.gov/sa/repayloans/understand/plans/income-driven.
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consumers, policymakers, consumer
advocates, market participants, policy
experts, and other stakeholders have
recognized the critical importance of
consistent, accurate, and actionable
information in order to facilitate
successful repayment.9
According to data recently released by
the Department of Education regarding
Direct Loans, borrowers in Pay As You
Earn (PAYE) and Income-Based
Repayment (IBR) (the most generous
income-driven repayment plans at the
time of the snapshot) had the lowest
delinquency rates. In contrast,
borrowers enrolled in a standard 10-year
repayment plan had delinquency rates
nearly seven times higher than
borrowers enrolled in PAYE (Figure 1).
9 See Consumer Financial Protection Bureau, U.S.
Department of Education, U.S. Department of the
Treasury, Joint Statement of the Principles on
Student Loan Servicing, 80 FR 67389 (Nov. 2, 2015),
available at https://files.consumerfinance.gov/f/
201509_cfpb_treasury_education-joint-statement-ofprinciples-on-student-loan-servicing.pdf; see also
Comment from the National Consumer Law Center,
CFPB–2015–0021–6840 (‘‘Student loan borrowers
lack information about the current status of their
accounts and options for restructuring payments.);
Comment from the National Association of Student
Financial Aid Administrators, CFPB–2015–0021–
0806 (‘‘NASFAA advocates . . . for making the
consumption of the disclosure more efficient and
user-friendly by simplifying, refining, and
consolidating all consumer information
requirements . . .’’); Borrower Comment, CFPB–
2015–0021–0996 (‘‘Re-payment options are not
clearly stated . . . Servicers should include what
my monthly bill payments would be if I’m
considering different repayment options.’’);
Borrower Comment, CFPB–2015–0021–0076 (‘‘[My
servicer’s] monthly statements are the most
convoluted statements I’ve ever seen in my entire
life. I work in the banking industry and I struggle
each month to figure out what I’m supposed to be
paying.’’); Comment from Axis Financial Services,
CFPB–2015–0021–0374 (‘‘Borrowers who have
recently rehabilitated loans, have fallen behind in
payments or otherwise need special counseling
need more support than just a monthly bill or
occasional phone call. . . . Some borrowers may
benefit from additional contact such as reminders
via email, additional letters, invoices or call
campaigns.’’).
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10 See U.S. Department of Education, Federal
Student Aid, Servicing Summit Portfolio Overview
(Dec. 2014), available at https://
fsaconferences.ed.gov/conferences/library/2014/
servicing/2014ServicingSummitPortfolio
Overview.ppt.
11 Id.
12 See U.S. Government Accountability Office,
GAO–15–663, Federal Student Loans: Education
could do more to help ensure borrowers are aware
of repayment and forgiveness options (Aug. 2015),
available at https://www.gao.gov/products/GAO–15–
663.
13 See Request for Information on Student Loan
Servicing, CFPB–2015–0021–0001 (May 21, 2015),
available at https://www.regulations.gov/#!document
Detail;D=CFPB–2015–0021–0001; Borrower
Comment, CFPB–2015–0021–4023 (‘‘I was
originally with [my servicer] when I heard about a
new program . . . that would let me consolidate my
loan and . . . since I am a teacher, I could have my
loan forgiven after 10 years. I naturally signed right
up and at the time they told me that the standard
plan would be eligible for forgiveness. It turns out
I received the wrong information. I would have to
use a different [repayment] plan which would be
income sensitive. . . . It’s not fair that I got bad
advice from the [servicer] and that I will now be
paying my loan well into retirement.’’).
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provide the information necessary to
make informed decisions about various
repayment options.14 Student loan
servicers note that the expansion of
income-driven repayment plans and
other alternative options has introduced
new challenges for servicers seeking to
counsel borrowers about how to
navigate loan repayment.15 One 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,’’ noting that this
may lead to borrowers ‘‘giving up or not
taking action at all.’’ 16
14 See, e.g., Borrower Comment, CFPB–2015–
0021–2288 (‘‘I was given wrong information about
a lower payment plan. I am paying more on my
loans, rather than a lower payment, which is
causing financial distress. The employees of the
company have given me false information and I’m
not sure if I am on the correct repayment plan.’’).
15 See, e.g., Comment from Pennsylvania Higher
Education Assistance Agency, CFPB–2015–0021–
0974 (‘‘Student loan borrowers and student loan
servicers must both cope with the complex nature
of student loans and the wide variety of terms and
conditions attached to these loans. . . . This
situation makes navigating student loans difficult
for borrowers and presents challenges to student
loan servicers as they attempt to counsel and assist
these borrowers.’’).
16 Comment from Student Loan Servicing
Alliance, CFPB–2015–0021–0357 (‘‘We believe the
number of plans and the variety in their terms have
become so confusing as to be counter-productive.
Given the number and complexity of the plans, it
is increasingly difficult for consumers to
understand and can lead to borrowers giving up or
not taking action at all.’’).
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These observations, taken together
with other academic research,17
findings by state law enforcement
agencies,18 and public comments from
consumers reporting servicing
problems,19 raise serious questions
about the adequacy of current servicing
practices related to enrollment in
income-driven repayment plans.
In response, the Bureau engaged in a
joint effort with the Department of
Education and the Department of the
17 See generally Adam Looney & Constantine
Yannelis, A Crisis in Student Loans? How Changes
in the Characteristics of Borrowers and in the
Institutions they Attend Contributed to Rising Loan
Defaults, BPEA Conference Draft, The Brookings
Institution (Sept. 2015), available at https://
www.brookings.edu/∼/media/projects/bpea/fall2015_embargoed/conferencedraft_looneyyannelis_
studentloandefaults.pdf (finding that 70 percent of
defaulted borrowers in the authors’ sample were
formerly enrolled at for-profit or two-year colleges,
and that these borrowers’ median wages were
between $20,900–$23,900). Based on the Bureau’s
calculation, depending on a borrower’s family size,
the average borrower with these characteristics
would likely be eligible to make a $0 monthly
payment under an income-driven repayment plan.
18 See, e.g., Letter from State Attorneys General
Lisa Madigan et al., CFPB–2015–0021–0376,
available at https://www.regulations.gov/#
!documentDetail;D=CFPB-2015-0021-0376.
19 For a complete collection of comments
received in response to the Bureau’s May 2015
Request for Information on Student Loan Servicing,
see CFPB–2015–0021–0001, available at https://
www.regulations.gov/#!docketDetail;D=CFPB-20150021. Public comments and other qualitative inputs
described in this report are not necessarily
representative of the experience of over 41 million
borrowers in the student loan market; however,
comments help to illustrate where there may be a
mismatch between borrower needs and actual
service delivered.
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However, evidence suggests that
borrowers who could benefit from these
arrangements may end up in
delinquency or default instead. One
recent analysis by the Government
Accountability Office found that 70
percent of borrowers in default had
income that would entitle them to a
reduced monthly payment under one of
these plans.12 Additionally, borrowers
told us how inconsistent and
incomplete information from servicers
can be a direct impediment to
successful repayment,13 noting that
current written communications do not
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Treasury to develop a vision for marketwide reform, including an emphasis on
the importance of accurate and
actionable information for borrowers
seeking to make decisions about student
loan repayment.20 In early 2016, in
support of this effort, 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 Bureau’s initial
observations include:
• Borrowers respond more favorably
to actionable information. Borrowers
explained that they are seeking
actionable information regarding
available repayment options. Borrowers
stated that billing statements are
difficult to understand, and not
indicative of available alternative
repayment options.
• Personalized communications may
be more effective. Borrowers indicated
that they would respond most favorably
to personalized billing written
communications that provide actionable
repayment information reflective of a
borrower’s actual income and family
size.
• Routine electronic communications
may present an opportunity for targeted
outreach. Borrowers described that they
may be more likely to take action in
response to monthly email
communications containing
personalized repayment information,
rather than written statements
instructing borrowers to log in to review
their account or to call a customer
service representative to discuss
available options.
• Once borrowers fall behind, they
may be less likely to engage with their
debt. Delinquent borrowers described
how they need some prompting to reengage with a past-due debt; written
communications that suggest ‘‘business
as usual’’ are often ignored.
These observations, along with other
qualitative and quantitative inputs,
including responses to our May 2015
Request for Information on Student
Loan Servicing, consumer complaints,
consultation with state law enforcement
officials, and discussions with
consumer advocates, individual market
participants, and organizations
representing participants in the student
20 Consumer Financial Protection Bureau, U.S.
Department of Education, U.S. Department of the
Treasury, Joint Statement of the Principles on
Student Loan Servicing, 80 FR 67389 (Nov. 2, 2015),
available at https://files.consumerfinance.gov/f/
201509_cfpb_treasury_education-joint-statement-ofprinciples-on-student-loan-servicing.pdf.
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loan servicing market, informed the
development of a series of potential
borrower Payback Playbooks developed
by the Bureau, in coordination with the
Department of Education and the
Department of the Treasury.21 The
Bureau is seeking comments discussing
how these Playbooks could affect
borrowers when evaluating available
alternative repayment plans and
facilitate enrollment in alternative
repayment plans, when appropriate.22
The Bureau requests comments in
response to three documents:
• Payback Playbook A: Personalized
information about alternative repayment
options (.pdf attachment or image).
• Payback Playbook B (variant of
Payback Playbook A): Alternate
approach to personalized information
about alternative repayment options
(.pdf attachment or image).
• Payback Playbook C: Information
about income-driven repayment options
for borrowers likely at risk of default
(.pdf attachment or image).
Part B: Questions About Written
Communications to Student Loan
Borrowers
The Bureau is seeking general
feedback on a series of draft Payback
Playbooks that student loan servicers
would send to borrowers, developed in
collaboration with the Department of
Education and the Department of the
Treasury, as well as responses to the
specific questions below. Section I of
this Part provides a set of questions for
respondents related to these draft
Playbooks. Section II of this Part
provides a set of questions directed to
student loan borrowers related to
Playbooks A and C. Section III of this
Part provides a set of questions for
respondents about the general
communication of information related
to student loans.
21 In December 2015, the Department of
Education announced a new set of student loan
billing statement disclosure requirements designed
to provide clear and direct information to
borrowers. In addition to enhanced disclosures
while borrowers are in school, in a grace period, or
entering repayment, borrowers will receive monthly
statements with specific information. Additionally,
delinquent borrowers will receive increased
outreach efforts to help facilitate repayment.
Submissions provided in response to this RFI may
also inform the development of these disclosures.
See U.S. Department of Education, Advancing the
Student Aid Bill of Rights—An Update on
Deliverables (Dec. 22, 2015), available at https://
sites.ed.gov/ous/2015/12/advancing-the-studentaid-bill-of-rights-an-update-on-deliverables/.
22 https://www.consumerfinance.gov/paybackplaybook.
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Section I: Specific Questions About
Elements of Payback Playbooks A, B,
and C
The Bureau, in coordination with the
Department of Education and the
Department of the Treasury, developed
three potential Payback Playbooks
designed to assist student loan
borrowers when selecting between
alternative repayment plans. Playbooks
A and B present three options to
consumers: (1) Their current repayment
arrangement; (2) one alternative
repayment arrangement with an
amortizing payment schedule (e.g.,
graduated repayment, extended
repayment, extended-graduated
repayment); and (3) one income-driven
repayment plan (e.g., Pay As You Earn,
Income-Based Repayment, IncomeContingent Repayment). In contrast,
Playbook C presents a single incomedriven repayment plan to consumers.
Policymakers and market participants
may wish to consider whether a
combination of these approaches is
appropriate in order to best serve a
broad cross-section of student loan
borrowers in various stages of
repayment, experiencing varying levels
of distress, and reflecting variations in
risk levels between different segments of
servicers’ loan portfolios.
Payback Playbooks A and B
Playbooks A and B are identical, other
than the description of income
information and estimated payment
amount under an income-driven
repayment plan. These designs present
two approaches to personalization. One
approach offers a more precise estimate
of a monthly payment under this plan
and informs the borrower that this
estimate was derived from actual
information about his or her income and
family size. The alternative approach
provides a rounded estimate of a
borrower’s likely monthly payment,
based on similar information about
income and family size used to populate
Playbook A. Estimated payment
amounts indicated in either
communication require that the
borrower’s servicer have access to
information about the borrower’s
income and family size. The Bureau
understands that such information
could potentially be available through
various channels, including other
government agencies. The Bureau
encourages respondents to provide
general feedback related to both
approaches, as well as responses to any
of the specific questions included
below.
1. Please provide general feedback
related to Playbook A and Playbook B,
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including any relevant information
related to how these written
communications could affect consumer
decision-making regarding student loan
repayment options and mitigate
defaults.
2. Please provide feedback related to
specific elements of Playbook A and
Playbook B, including, for example,
feedback related to:
a. The language used to introduce the
communication;
b. The number and selection of
repayment plans presented to
consumers;
c. The relative emphasis on specific
repayment plans;
d. The emphasis on lowering the
borrower’s monthly payment amount;
e. The presentation of the advantages
and disadvantages to student loan
borrowers associated with an alternative
repayment plan with an amortizing
repayment schedule (e.g., graduated,
extended, or extended-graduated plans);
f. The presentation of the advantages
and disadvantages to student loan
borrowers associated with incomedriven repayment plans (e.g., IncomeBased Repayment, Pay As You Earn,
and Revised Pay As You Earn);
g. The presentation of information
about the terms and conditions of
specific repayment plans;
h. The presentation of information
regarding how borrowers can obtain
more information about repayment
options;
i. The presentation of current and
future monthly payment amounts for
each repayment plan;
j. The description of the costs
associated with each repayment plan,
including the depiction of future
monthly payment levels and description
of the impact of repayment plan
selection on total lifetime loan costs;
k. The visual representation of
information contained in these
communications; and
l. The means by which a borrower is
provided with this information (e.g.,
periodic statement, routine email
communication, standalone written
communication, online payment portal,
etc.).
3. The Bureau seeks feedback on the
appropriate audience for these
Playbooks. In particular, please provide
feedback related to the efficacy and
applicability of these Playbooks to
specific populations of student loan
borrowers, including, for example:
a. Borrowers who are current on their
student loans (i.e., have no past-due
student loan balance);
b. Borrowers who are at risk of
delinquency;
c. Borrowers who are delinquent on
one or more student loans;
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18:53 May 02, 2016
Jkt 238001
d. Borrowers who have missed
multiple monthly student loan
payments;
e. Borrowers who are at imminent risk
of default;
f. Borrowers who have previously
been in default, including borrowers
who have successfully rehabilitated
defaulted loans;
g. Borrowers who have high levels of
student loan indebtedness;
h. Borrowers who have not completed
a program of study;
i. Borrowers who attended certain
categories of institutions of higher
education (e.g., four-year college,
community college, for-profit college,
vocational school);
j. Borrowers who are currently
enrolled in an income-driven repayment
plan;
k. Borrowers who are in school or in
a grace period;
l. Borrowers with Direct Loans;
m. Borrowers with Federal Family
Education Loan Program (FFELP) loans;
n. Borrowers with Perkins loans;
o. Parents with loans made through
the PLUS program; and
p. Borrowers with Federal
Consolidation Loans or Direct
Consolidation Loans.
Payback Playbook C
Payback Playbook C provides
borrowers with information on a single
income-driven repayment plan,
including a personalized description of
the estimated monthly payment under
this arrangement, similar to the
approach used to describe incomedriven repayment plans in Playbook A.
Respondents are encouraged to evaluate
this communication in the context of
the specific needs of borrowers who are
at risk of default, potentially including
borrowers who have missed multiple
monthly payments, borrowers who have
not completed a program of study, or
borrowers who exhibit other criteria
predictive of future financial distress.
When evaluating this communication,
including the proposed approach to
personalization, respondents are
encouraged to consider the advantages,
disadvantages, and risks associated with
enrollment in an income-driven
repayment plan, as well as the potential
costs to borrowers resulting from
delinquency and default.
1. Please provide general feedback
related to Playbook C, including any
relevant information related to the
extent to which these written
communications could affect consumer
decision-making regarding student loan
repayment options and mitigate
delinquencies or defaults.
2. Please provide feedback related to
specific elements of Playbook C,
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Fmt 4703
Sfmt 4703
26533
including, for example, feedback related
to:
a. The language used to introduce the
communication;
b. The number and selection of the
repayment plan(s) presented to
consumers;
c. The relative emphasis on a specific
repayment plan;
d. The emphasis on lowering the
borrower’s monthly payment amount;
e. The presentation of the advantages
and disadvantages to student loan
borrowers associated with incomedriven repayment plans (e.g., IncomeBased Repayment, Pay As You Earn,
and Revised Pay As You Earn);
f. The presentation of information
regarding how borrowers can obtain
more information about repayment
options;
g. The presentation of the current and
future monthly amount for the
repayment plan;
h. The description of the cost
associated with the repayment plan,
including the depiction of future
monthly payment amount and
description of the impact of repayment
plan selection on total lifetime loan
costs;
i. The visual representation of
information contained in these written
communications; and
j. The means by which a borrower is
provided with this information (e.g.,
periodic statement, routine email
communication, stand-alone written
communication, online payment portal,
etc.).
3. The Bureau seeks feedback on the
appropriate audience for this Playbook.
In particular, please provide feedback
related to the efficacy and applicability
of this Playbook to specific populations
of student loan borrowers, including, for
example:
a. Borrowers who are current on their
student loans (i.e., have no past-due
student loan balance);
b. Borrowers who are at risk of
delinquency;
c. Borrowers who are delinquent on
one or more student loans;
d. Borrowers who have missed
multiple monthly student loan
payments;
e. Borrowers who are at imminent risk
of default;
f. Borrowers who have previously
been in default, including borrowers
who have successfully rehabilitated
defaulted loans;
g. Borrowers who have high levels of
student indebtedness;
h. Borrowers who have not completed
a program of study;
i. Borrowers who attend certain
categories of institutions of higher
E:\FR\FM\03MYN1.SGM
03MYN1
26534
Federal Register / Vol. 81, No. 85 / Tuesday, May 3, 2016 / Notices
education (e.g., four-year college,
community college, for-profit college,
vocational school);
j. Borrowers who are currently
enrolled in an income-driven repayment
plan;
k. Borrowers who are in school or in
a grace period;
l. Borrowers with Direct Loans;
m. Borrowers with Federal Family
Education Loan Program (FFELP) loans;
n. Borrowers with Perkins loans;
o. Parents with loans made through
the PLUS program; and
p. Borrowers with Federal
Consolidation Loans or Direct
Consolidation Loans.
Section II. Specific Questions to
Borrowers About Elements of Payback
Playbooks A and C
To supplement this request for
information, the Bureau launched a
consumer-facing landing page soliciting
feedback on these prototype Payback
Playbooks.23 The Bureau developed the
following specific questions for
individual student loan borrowers, in
order to better understand how the
Playbook could most effectively serve
their needs. Although all commenters
are encouraged to review this request for
information in its entirety, consumers
should consider following questions
when evaluating these prototype
borrower communications:
1. How would the Playbook help you
understand and evaluate the options
you have to pay your student loan if it
reflected your likely payments based on
your actual income?
2. How could the Playbook better
provide you with important information
about your repayment options?
3. How would it be best to see the
Playbook (e.g., in monthly billing
statements, when you log on to your
account online, etc.)?
4. At what point during repayment
would you like to receive personalized
information about available repayment
options (e.g., during your grace period,
during repayment, etc.)?
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Section III: General Questions About the
Communication of Information to
Student Loan Borrowers in Repayment
The following questions solicit input
from the public about the effects of
increased disclosure of information
regarding repayment options in written
communications to student loan
borrowers from student loan servicers.
1. How could personalized
information related to repayment
options, including income-driven
23 https://www.consumerfinance.gov/paybackplaybook.
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Jkt 238001
repayment plans, affect consumer
decision-making? Personalized
information means repayment
information based on a borrower’s
personal information, including income
and family size.
2. Please provide any additional
relevant information related to written
communications with student loan
borrowers regarding repayment options,
including, for example:
a. Examples of existing written
communications provided to student
loan borrowers;
b. Information about the advantages
and disadvantages of such
communications, including any relevant
information related to implementation,
operations, and maintenance associated
with dissemination of these
communications;
c. Information related to privacy and
data security considerations when
populating and disseminating
information about borrowers’ loans,
income information, or other sensitive
financial or personal information,
including protecting the privacy of
borrowers in electronic communications
like email or text message;
d. Feedback about information
systems and other technical
considerations when populating and
disseminating personalized information
about student loans, including any
feedback about existing information
systems that provide accurate,
personalized information to consumers
with student loans;
e. Information about the availability,
cost, and accuracy of potential data
sources that include the income and
family size of student loan borrowers;
and
f. Information about the use of
consumer data, in order to populate
information contained in personalized
communications.
3. How could the communication
channel (e.g., U.S. Mail, email, SMS,
online portal) used to deliver borrower
communications affect borrower
engagement (e.g., email open rates,
click-through rates, inbound telephone
calls)?
4. How could personalized
information obtained to populate
written communications be adapted to
enhance oral communications with
consumers?
5. Please provide any relevant
information about the applicability of
personalized communications to
different segments of the student loan
market (i.e., private student loans,
guaranteed loans made under the
Federal Family Education Loan
Program, and Direct Loans).
PO 00000
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Fmt 4703
Sfmt 4703
6. How could the visual presentation
of information, including the
presentation of additional or
supplemental information in electronic
communications, affect consumer
decision-making when repaying student
loans?
Dated: April 25, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2016–10327 Filed 5–2–16; 8:45 am]
BILLING CODE 4810–AM–P
DEPARTMENT OF DEFENSE
Department of the Army
Notice of Intent To Grant Partially
Exclusive Patent License to 3D-sensIR,
Inc.; Stevenson Ranch, CA
Department of the Army, DoD.
Notice of intent.
AGENCY:
ACTION:
In compliance with 35 U.S.C.
209(e) and 37 CFR 404.7(a)(1)(i), the
Department of the Army hereby gives
notice of its intent to grant to 3D-sensIR,
Inc.; a corporation having its principle
place of business at 25762 Hawthorne
Place, Stevenson Ranch, CA 91381, a
partially exclusive license, for their
design and development of handheld 3D
smart cameras with specific application
in the areas of photorealistic 3D
measurements in the fields of
Architecture, Engineering, Construction
(AEC), Utility Assets Management, Law
Enforcement (i.e., crime and accident
scene investigations), Real-Estate, Arts
and Entertainment, Commercial Drones,
Commercial Robotics and Logistics. The
proposed license would be relative to
the following:
• U.S. Patent Number 8,081,301
entitled ‘‘LADAR Transmitting and
Receiving System and Method’’,
Inventors Stann, Giza and Lawler, Issue
Date Dec. 20, 2011.
DATES: The prospective partially
exclusive license may be granted unless
within fifteen (15) days from the date of
this published notice, the U.S. Army
Research Laboratory receives written
objections including evidence and
argument that establish that the grant of
the license would not be consistent with
the requirements of 35 U.S.C. 209 and
37 CFR 404.7. Competing applications
completed and received by the U.S.
Army Research Laboratory within
fifteen (15) days from the date of this
published notice will also be treated as
objections to the grant of the
contemplated exclusive license.
Objections submitted in response to
this notice will not be made available to
SUMMARY:
E:\FR\FM\03MYN1.SGM
03MYN1
]]>Agencies
[Federal Register Volume 81, Number 85 (Tuesday, May 3, 2016)]
[Notices]
[Pages 26529-26534]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-10327]
[[Page 26529]]
=======================================================================
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BUREAU OF CONSUMER FINANCIAL PROTECTION
[Docket No. CFPB-2016-0018]
Request for Information Regarding Student Loan Borrower
Communications
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Notice and request for information.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Consumer Financial Protection (Bureau or CFPB)
is seeking comments from the public related to consumer decision-making
when repaying student loans, including the presentation of information
about alternative repayment options. The submissions to this request
for information will assist policymakers and market participants when
considering potential options to enhance, supplement, or revise written
communications made to student loan borrowers by student loan
servicers, related to repayment options. The Bureau is seeking public
comments about how these communications could reduce defaults, improve
borrower outcomes, and spur innovation.
DATES: Comments must be received on or before June 12, 2016.
ADDRESSES: You may submit comments, identified by Docket No. CFPB-2016-
0018, by any of the following methods:
Electronic: https://www.regulations.gov. Follow the
instructions for submitting comments.
Email: FederalRegisterComments@cfpb.gov. Include Docket
No. CFPB-2016-0018 in the subject line of the message.
Mail: Monica Jackson, Office of the Executive Secretary,
Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC
20552.
Hand Delivery/Courier: Monica Jackson, Office of the
Executive Secretary, Consumer Financial Protection Bureau, 1275 First
Street NE., Washington, DC 20002.
Instructions: All submissions should include the agency name and
docket number for this proposal. Because paper mail in the Washington,
DC area and at the Bureau is subject to delay, commenters are
encouraged to submit comments electronically. In general, all comments
received will be posted without change to https://www.regulations.gov.
In addition, comments will be available for public inspection and
copying at 1275 First Street NE., Washington, DC 20002, on official
business days between the hours of 10 a.m. and 5 p.m. eastern time. You
can make an appointment to inspect the documents by telephoning (202)
435-7275.
All comments, including attachments and other supporting materials,
will become part of the public record and subject to public disclosure.
Sensitive personal information, such as account numbers or social
security numbers, should not be included. Comments generally will not
be edited to remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT: For general inquiries, submission
process questions, or any additional information, please contact Monica
Jackson, Office of the Executive Secretary, at 202-435-7275.
Authority: 12 U.S.C. 5511(c).
SUPPLEMENTARY INFORMATION: This Request for Information Regarding
Student Loan Borrower Communications seeks feedback from the public on
a series of potential borrower communications--Student Loan Payback
Playbooks--developed by the Bureau in coordination with the Department
of Education and the Department of the Treasury. The Bureau also seeks
public comment about the role that written communications play in
enabling successful student loan repayment.
The submissions to this request for information may assist market
participants and policymakers when considering potential options to
enhance, supplement, or revise written communications provided to
student loan borrowers, related to repayment options. Submissions will
further inform stakeholders' understanding of the relationship between
written communications and borrower decision-making related to student
loan repayment, particularly as a means to reduce delinquencies and
defaults. Comments submitted in response to this request for
information may also be used to inform the development of certain
disclosures required of the Department of Education by the Presidential
Memorandum on a Student Aid Bill of Rights, signed on March 10,
2015.\1\ The deadline for submission of comments is June 12, 2016.
---------------------------------------------------------------------------
\1\ See The White House, Presidential Memorandum--Student Aid
Bill of Rights (Mar. 10, 2015), available at https://www.whitehouse.gov/the-press-office/2015/03/10/presidential-memorandum-student-aid-bill-rights.
---------------------------------------------------------------------------
The Bureau encourages comments from the public, including:
Student loan borrowers;
Organizations representing students and student loan
borrowers;
Innovators, technology providers, and recent entrants into
the student loan market;
Institutions of higher education and affiliated parties;
Financial services providers, including but not limited to
lenders and servicers in the student loan market;
State law enforcement agencies and regulators;
Participants in the consumer data industry, including
credit reporting agencies;
Debt collectors;
Organizations promoting financial education;
Civil rights groups; and
Nationally recognized statistical rating organizations.
Please note that the Bureau is not soliciting individual student
account information in response to this notice and request for
information, nor is the Bureau seeking personally identifiable
information (PII) regarding student accounts.
All comments, including attachments and other supporting materials,
will become part of the public record and subject to public disclosure.
Sensitive personal information, such as account numbers or social
security numbers, should not be included. Comments generally will not
be edited to remove any identifying or contact information.
Part A: Accurate and Actionable Information Related to Student Loan
Repayment
In May 2015, the Bureau, in coordination with the Department of
Education and the Department of the Treasury, launched a public inquiry
into student loan servicing practices that sought input from the public
related to potential barriers to student loan repayment. A broad cross-
section of respondents, including consumers, student loan servicers,
consumer advocates, and others, highlighted the lack of information
regarding student loan repayment options as one of the potential
barriers to borrower success.\2\ Commenters emphasized that accurate
and actionable information about various consumer protections and
borrower benefits could improve borrower decision-making.\3\
---------------------------------------------------------------------------
\2\ See, e.g., Borrower Comment, CFPB-2015-0021-0076
(``[M]onthly statements are the most convoluted statements I've ever
seen in my entire life. I work in the banking industry and I
struggle each month to figure out what I'm supposed to be
paying.''); Comment from Axis Financial Services, CFPB-2015-0021-
0374 (``Most defaulted borrowers need to hear about the opportunity
and benefits of rehabilitation, affordable income-based repayment
options, procedures for setting up a rehabilitation and answers to
any questions the borrowers may have.''); Comment from The Institute
for College Access & Success, CFPB-2015-0021-0356 ``[B]orrowers
cannot count on servicers to provide information and assistance that
could help them make affordable payments and stay out of
default.''); Comment from Pennsylvania Higher Education Assistance
Agency, CFPB-2015-0021-0974 (``While most borrowers are served well
by customer service agents that are versed in a wide variety of
student loan programs and options, some borrowers need the
assistance of specially trained teams of representatives who can
provide specialized information and counseling.'').
\3\ See, e.g., Borrower Comment, CFPB-2015-0021-0996 (``Re-
payment options are not clearly stated . . . Servicers should
include what my monthly bill payments would be if I'm considering
different payment options.''); Borrower Comment, CFPB-2015-0021-6521
(``I have dealt with several loan servicers and received
inconsistent and erroneous answers to common questions. . . .
[R]epresentatives would scream at me over the phone that I owed a
substantial amount of money immediately, more than I could possibly
afford to pay. I would have to hang up and call again hoping to get
a representative that was more reasonable. The next representative
would tell me something completely different. . . . They told me I
do not qualify for Income-Based Repayment because I have Grad Plus
Loans . . . This information is completely false, this restriction
only applies to Parent Plus loans which I do not have and I do not
exceed any income restrictions . . . . This false and inconsistent
information led me to defer payments when I could have been making
them under IBR.'').
---------------------------------------------------------------------------
[[Page 26530]]
Approximately 42 million Americans owe student loan debt.\4\ In
less than a decade, the volume of outstanding federal student loan debt
has more than doubled, rising from $516 billion in 2007 to greater than
$1.2 trillion in the first quarter of 2016,\5\ surpassing all other
categories of consumer debt aside from mortgages.
---------------------------------------------------------------------------
\4\ See U.S. Department of Education, Federal Student Aid
Portfolio Summary (accessed on Apr. 12, 2016), available at https://studentaid.ed.gov/sa/sites/default/files/fsawg/datacenter/library/PortfolioSummary.xls.
\5\ See U.S. Department of Education, Federal Student Aid
Portfolio Summary (accessed on Apr. 12, 2016), available at https://studentaid.ed.gov/sa/sites/default/files/fsawg/datacenter/library/PortfolioSummary.xls.
---------------------------------------------------------------------------
Unlike other types of consumer debt, which have realized reduced
levels of delinquency and default compared to highs reached following
the Great Recession, the student loan market continues to show signs of
distress.\6\ The Bureau estimates that a quarter of student loan
borrowers are, collectively, either delinquent or in default on
approximately $200 billion in student debt.\7\ Elevated levels of
student loan borrower distress exist despite the availability of a
range of protections for borrowers that are designed to mitigate
delinquency and default, including income-driven repayment plans
provided for by law for the vast majority of borrowers with federal
student loans.\8\ Given the growing share of consumers managing student
loan debt, consumers, policymakers, consumer advocates, market
participants, policy experts, and other stakeholders have recognized
the critical importance of consistent, accurate, and actionable
information in order to facilitate successful repayment.\9\
---------------------------------------------------------------------------
\6\ See Federal Reserve Bank of New York, Quarterly Report on
Household Debt and Credit (Aug. 2015), available at https://www.newyorkfed.org/householdcredit/2015-q2/data/pdf/HHDC_2015Q2.pdf.
\7\ U.S. Department of Education, Federal Student Loan
Portfolio: Direct Loan and Federal Family Education Loan Portfolio
by Loan Status (accessed on Apr. 12, 2016), available at https://studentaid.ed.gov/sa/sites/default/files/fsawg/datacenter/library/PortfoliobyLoanStatus.xls; U.S. Department of Education, Federal
Perkins Loan Program Status of Default as of June 30, 2015 (Mar. 17,
2016), available at https://ifap.ed.gov/eannouncements/031716PerkinsCDR1415.html; U.S. Department of Education and Consumer
Financial Protection Bureau, Private Student Loans (July 2012),
available at https://www.consumerfinance.gov/reports/private-student-loans-report/; U.S. Department of Education, Federal Student Loan
Portfolio: Direct Loan Portfolio by Delinquency Status (accessed on
Apr. 12, 2016), available at https://studentaid.ed.gov/sa/sites/default/files/fsawg/datacenter/library/DLPortfoliobyDelinquencyStatus.xls; U.S. Department of Education,
Federal Student Loan Portfolio: ED-Held FFEL Portfolio by
Delinquency Status (accessed on Apr. 12, 2016), available at https://studentaid.ed.gov/sa/sites/default/files/fsawg/datacenter/library/EDHeldFFELPortfoliobyDelinquencyStatus.xls.
\8\ Readers should note that access to Income-Based Repayment
(IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE)
is limited to borrowers with federal loans used to finance their own
education. Parents with federal student loans made under the Parent
PLUS program may use another income-driven repayment plan, Income-
Contingent Repayment (ICR), but must first refinance any parent
loans into a new Direct Consolidation Loan in order to be eligible.
See U.S. Department of Education, Income-Driven Plans, available at
https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven.
\9\ See Consumer Financial Protection Bureau, U.S. Department of
Education, U.S. Department of the Treasury, Joint Statement of the
Principles on Student Loan Servicing, 80 FR 67389 (Nov. 2, 2015),
available at https://files.consumerfinance.gov/f/201509_cfpb_treasury_education-joint-statement-of-principles-on-student-loan-servicing.pdf; see also Comment from the National
Consumer Law Center, CFPB-2015-0021-6840 (``Student loan borrowers
lack information about the current status of their accounts and
options for restructuring payments.); Comment from the National
Association of Student Financial Aid Administrators, CFPB-2015-0021-
0806 (``NASFAA advocates . . . for making the consumption of the
disclosure more efficient and user-friendly by simplifying,
refining, and consolidating all consumer information requirements .
. .''); Borrower Comment, CFPB-2015-0021-0996 (``Re-payment options
are not clearly stated . . . Servicers should include what my
monthly bill payments would be if I'm considering different
repayment options.''); Borrower Comment, CFPB-2015-0021-0076 (``[My
servicer's] monthly statements are the most convoluted statements
I've ever seen in my entire life. I work in the banking industry and
I struggle each month to figure out what I'm supposed to be
paying.''); Comment from Axis Financial Services, CFPB-2015-0021-
0374 (``Borrowers who have recently rehabilitated loans, have fallen
behind in payments or otherwise need special counseling need more
support than just a monthly bill or occasional phone call. . . .
Some borrowers may benefit from additional contact such as reminders
via email, additional letters, invoices or call campaigns.'').
---------------------------------------------------------------------------
According to data recently released by the Department of Education
regarding Direct Loans, borrowers in Pay As You Earn (PAYE) and Income-
Based Repayment (IBR) (the most generous income-driven repayment plans
at the time of the snapshot) had the lowest delinquency rates. In
contrast, borrowers enrolled in a standard 10-year repayment plan had
delinquency rates nearly seven times higher than borrowers enrolled in
PAYE (Figure 1).
[[Page 26531]]
[GRAPHIC] [TIFF OMITTED] TN03MY16.004
However, evidence suggests that borrowers who could benefit from
these arrangements may end up in delinquency or default instead. One
recent analysis by the Government Accountability Office found that 70
percent of borrowers in default had income that would entitle them to a
reduced monthly payment under one of these plans.\12\ Additionally,
borrowers told us how inconsistent and incomplete information from
servicers can be a direct impediment to successful repayment,\13\
noting that current written communications do not provide the
information necessary to make informed decisions about various
repayment options.\14\ Student loan servicers note that the expansion
of income-driven repayment plans and other alternative options has
introduced new challenges for servicers seeking to counsel borrowers
about how to navigate loan repayment.\15\ One 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,'' noting that this may lead to borrowers ``giving
up or not taking action at all.'' \16\
---------------------------------------------------------------------------
\10\ See U.S. Department of Education, Federal Student Aid,
Servicing Summit Portfolio Overview (Dec. 2014), available at https://fsaconferences.ed.gov/conferences/library/2014/servicing/2014ServicingSummitPortfolioOverview.ppt.
\11\ Id.
\12\ See U.S. Government Accountability Office, GAO-15-663,
Federal Student Loans: Education could do more to help ensure
borrowers are aware of repayment and forgiveness options (Aug.
2015), available at https://www.gao.gov/products/GAO-15-663.
\13\ See Request for Information on Student Loan Servicing,
CFPB-2015-0021-0001 (May 21, 2015), available at https://www.regulations.gov/#!documentDetail;D=CFPB-2015-0021-0001; Borrower
Comment, CFPB-2015-0021-4023 (``I was originally with [my servicer]
when I heard about a new program . . . that would let me consolidate
my loan and . . . since I am a teacher, I could have my loan
forgiven after 10 years. I naturally signed right up and at the time
they told me that the standard plan would be eligible for
forgiveness. It turns out I received the wrong information. I would
have to use a different [repayment] plan which would be income
sensitive. . . . It's not fair that I got bad advice from the
[servicer] and that I will now be paying my loan well into
retirement.'').
\14\ See, e.g., Borrower Comment, CFPB-2015-0021-2288 (``I was
given wrong information about a lower payment plan. I am paying more
on my loans, rather than a lower payment, which is causing financial
distress. The employees of the company have given me false
information and I'm not sure if I am on the correct repayment
plan.'').
\15\ See, e.g., Comment from Pennsylvania Higher Education
Assistance Agency, CFPB-2015-0021-0974 (``Student loan borrowers and
student loan servicers must both cope with the complex nature of
student loans and the wide variety of terms and conditions attached
to these loans. . . . This situation makes navigating student loans
difficult for borrowers and presents challenges to student loan
servicers as they attempt to counsel and assist these borrowers.'').
\16\ Comment from Student Loan Servicing Alliance, CFPB-2015-
0021-0357 (``We believe the number of plans and the variety in their
terms have become so confusing as to be counter-productive. Given
the number and complexity of the plans, it is increasingly difficult
for consumers to understand and can lead to borrowers giving up or
not taking action at all.'').
---------------------------------------------------------------------------
These observations, taken together with other academic
research,\17\ findings by state law enforcement agencies,\18\ and
public comments from consumers reporting servicing problems,\19\ raise
serious questions about the adequacy of current servicing practices
related to enrollment in income-driven repayment plans.
---------------------------------------------------------------------------
\17\ See generally Adam Looney & Constantine Yannelis, A Crisis
in Student Loans? How Changes in the Characteristics of Borrowers
and in the Institutions they Attend Contributed to Rising Loan
Defaults, BPEA Conference Draft, The Brookings Institution (Sept.
2015), available at https://www.brookings.edu/~/media/projects/bpea/
fall-2015_embargoed/
conferencedraft_looneyyannelis_studentloandefaults.pdf (finding that
70 percent of defaulted borrowers in the authors' sample were
formerly enrolled at for-profit or two-year colleges, and that these
borrowers' median wages were between $20,900-$23,900). Based on the
Bureau's calculation, depending on a borrower's family size, the
average borrower with these characteristics would likely be eligible
to make a $0 monthly payment under an income-driven repayment plan.
\18\ See, e.g., Letter from State Attorneys General Lisa Madigan
et al., CFPB-2015-0021-0376, available at https://www.regulations.gov/#!documentDetail;D=CFPB-2015-0021-0376.
\19\ For a complete collection of comments received in response
to the Bureau's May 2015 Request for Information on Student Loan
Servicing, see CFPB-2015-0021-0001, available at https://www.regulations.gov/#!docketDetail;D=CFPB-2015-0021. Public comments
and other qualitative inputs described in this report are not
necessarily representative of the experience of over 41 million
borrowers in the student loan market; however, comments help to
illustrate where there may be a mismatch between borrower needs and
actual service delivered.
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In response, the Bureau engaged in a joint effort with the
Department of Education and the Department of the
[[Page 26532]]
Treasury to develop 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.\20\
In early 2016, in support of this effort, 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 Bureau's initial
observations include:
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\20\ Consumer Financial Protection Bureau, U.S. Department of
Education, U.S. Department of the Treasury, Joint Statement of the
Principles on Student Loan Servicing, 80 FR 67389 (Nov. 2, 2015),
available at https://files.consumerfinance.gov/f/201509_cfpb_treasury_education-joint-statement-of-principles-on-student-loan-servicing.pdf.
Borrowers respond more favorably to actionable
information. Borrowers explained that they are seeking actionable
information regarding available repayment options. Borrowers stated
that billing statements are difficult to understand, and not indicative
of available alternative repayment options.
Personalized communications may be more effective.
Borrowers indicated that they would respond most favorably to
personalized billing written communications that provide actionable
repayment information reflective of a borrower's actual income and
family size.
Routine electronic communications may present an
opportunity for targeted outreach. Borrowers described that they may be
more likely to take action in response to monthly email communications
containing personalized repayment information, rather than written
statements instructing borrowers to log in to review their account or
to call a customer service representative to discuss available options.
Once borrowers fall behind, they may be less likely to
engage with their debt. Delinquent borrowers described how they need
some prompting to re-engage with a past-due debt; written
communications that suggest ``business as usual'' are often ignored.
These observations, along with other qualitative and quantitative
inputs, including responses to our May 2015 Request for Information on
Student Loan Servicing, consumer complaints, consultation with state
law enforcement officials, and discussions with consumer advocates,
individual market participants, and organizations representing
participants in the student loan servicing market, informed the
development of a series of potential borrower Payback Playbooks
developed by the Bureau, in coordination with the Department of
Education and the Department of the Treasury.\21\ The Bureau is seeking
comments discussing how these Playbooks could affect borrowers when
evaluating available alternative repayment plans and facilitate
enrollment in alternative repayment plans, when appropriate.\22\ The
Bureau requests comments in response to three documents:
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\21\ In December 2015, the Department of Education announced a
new set of student loan billing statement disclosure requirements
designed to provide clear and direct information to borrowers. In
addition to enhanced disclosures while borrowers are in school, in a
grace period, or entering repayment, borrowers will receive monthly
statements with specific information. Additionally, delinquent
borrowers will receive increased outreach efforts to help facilitate
repayment. Submissions provided in response to this RFI may also
inform the development of these disclosures. See U.S. Department of
Education, Advancing the Student Aid Bill of Rights--An Update on
Deliverables (Dec. 22, 2015), available at https://sites.ed.gov/ous/2015/12/advancing-the-student-aid-bill-of-rights-an-update-on-deliverables/.
\22\ https://www.consumerfinance.gov/payback-playbook.
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Payback Playbook A: Personalized information about
alternative repayment options (.pdf attachment or image).
Payback Playbook B (variant of Payback Playbook A):
Alternate approach to personalized information about alternative
repayment options (.pdf attachment or image).
Payback Playbook C: Information about income-driven
repayment options for borrowers likely at risk of default (.pdf
attachment or image).
Part B: Questions About Written Communications to Student Loan
Borrowers
The Bureau is seeking general feedback on a series of draft Payback
Playbooks that student loan servicers would send to borrowers,
developed in collaboration with the Department of Education and the
Department of the Treasury, as well as responses to the specific
questions below. Section I of this Part provides a set of questions for
respondents related to these draft Playbooks. Section II of this Part
provides a set of questions directed to student loan borrowers related
to Playbooks A and C. Section III of this Part provides a set of
questions for respondents about the general communication of
information related to student loans.
Section I: Specific Questions About Elements of Payback Playbooks A, B,
and C
The Bureau, in coordination with the Department of Education and
the Department of the Treasury, developed three potential Payback
Playbooks designed to assist student loan borrowers when selecting
between alternative repayment plans. Playbooks A and B present three
options to consumers: (1) Their current repayment arrangement; (2) one
alternative repayment arrangement with an amortizing payment schedule
(e.g., graduated repayment, extended repayment, extended-graduated
repayment); and (3) one income-driven repayment plan (e.g., Pay As You
Earn, Income-Based Repayment, Income-Contingent Repayment). In
contrast, Playbook C presents a single income-driven repayment plan to
consumers. Policymakers and market participants may wish to consider
whether a combination of these approaches is appropriate in order to
best serve a broad cross-section of student loan borrowers in various
stages of repayment, experiencing varying levels of distress, and
reflecting variations in risk levels between different segments of
servicers' loan portfolios.
Payback Playbooks A and B
Playbooks A and B are identical, other than the description of
income information and estimated payment amount under an income-driven
repayment plan. These designs present two approaches to
personalization. One approach offers a more precise estimate of a
monthly payment under this plan and informs the borrower that this
estimate was derived from actual information about his or her income
and family size. The alternative approach provides a rounded estimate
of a borrower's likely monthly payment, based on similar information
about income and family size used to populate Playbook A. Estimated
payment amounts indicated in either communication require that the
borrower's servicer have access to information about the borrower's
income and family size. The Bureau understands that such information
could potentially be available through various channels, including
other government agencies. The Bureau encourages respondents to provide
general feedback related to both approaches, as well as responses to
any of the specific questions included below.
1. Please provide general feedback related to Playbook A and
Playbook B,
[[Page 26533]]
including any relevant information related to how these written
communications could affect consumer decision-making regarding student
loan repayment options and mitigate defaults.
2. Please provide feedback related to specific elements of Playbook
A and Playbook B, including, for example, feedback related to:
a. The language used to introduce the communication;
b. The number and selection of repayment plans presented to
consumers;
c. The relative emphasis on specific repayment plans;
d. The emphasis on lowering the borrower's monthly payment amount;
e. The presentation of the advantages and disadvantages to student
loan borrowers associated with an alternative repayment plan with an
amortizing repayment schedule (e.g., graduated, extended, or extended-
graduated plans);
f. The presentation of the advantages and disadvantages to student
loan borrowers associated with income-driven repayment plans (e.g.,
Income-Based Repayment, Pay As You Earn, and Revised Pay As You Earn);
g. The presentation of information about the terms and conditions
of specific repayment plans;
h. The presentation of information regarding how borrowers can
obtain more information about repayment options;
i. The presentation of current and future monthly payment amounts
for each repayment plan;
j. The description of the costs associated with each repayment
plan, including the depiction of future monthly payment levels and
description of the impact of repayment plan selection on total lifetime
loan costs;
k. The visual representation of information contained in these
communications; and
l. The means by which a borrower is provided with this information
(e.g., periodic statement, routine email communication, standalone
written communication, online payment portal, etc.).
3. The Bureau seeks feedback on the appropriate audience for these
Playbooks. In particular, please provide feedback related to the
efficacy and applicability of these Playbooks to specific populations
of student loan borrowers, including, for example:
a. Borrowers who are current on their student loans (i.e., have no
past-due student loan balance);
b. Borrowers who are at risk of delinquency;
c. Borrowers who are delinquent on one or more student loans;
d. Borrowers who have missed multiple monthly student loan
payments;
e. Borrowers who are at imminent risk of default;
f. Borrowers who have previously been in default, including
borrowers who have successfully rehabilitated defaulted loans;
g. Borrowers who have high levels of student loan indebtedness;
h. Borrowers who have not completed a program of study;
i. Borrowers who attended certain categories of institutions of
higher education (e.g., four-year college, community college, for-
profit college, vocational school);
j. Borrowers who are currently enrolled in an income-driven
repayment plan;
k. Borrowers who are in school or in a grace period;
l. Borrowers with Direct Loans;
m. Borrowers with Federal Family Education Loan Program (FFELP)
loans;
n. Borrowers with Perkins loans;
o. Parents with loans made through the PLUS program; and
p. Borrowers with Federal Consolidation Loans or Direct
Consolidation Loans.
Payback Playbook C
Payback Playbook C provides borrowers with information on a single
income-driven repayment plan, including a personalized description of
the estimated monthly payment under this arrangement, similar to the
approach used to describe income-driven repayment plans in Playbook A.
Respondents are encouraged to evaluate this communication in the
context of the specific needs of borrowers who are at risk of default,
potentially including borrowers who have missed multiple monthly
payments, borrowers who have not completed a program of study, or
borrowers who exhibit other criteria predictive of future financial
distress. When evaluating this communication, including the proposed
approach to personalization, respondents are encouraged to consider the
advantages, disadvantages, and risks associated with enrollment in an
income-driven repayment plan, as well as the potential costs to
borrowers resulting from delinquency and default.
1. Please provide general feedback related to Playbook C, including
any relevant information related to the extent to which these written
communications could affect consumer decision-making regarding student
loan repayment options and mitigate delinquencies or defaults.
2. Please provide feedback related to specific elements of Playbook
C, including, for example, feedback related to:
a. The language used to introduce the communication;
b. The number and selection of the repayment plan(s) presented to
consumers;
c. The relative emphasis on a specific repayment plan;
d. The emphasis on lowering the borrower's monthly payment amount;
e. The presentation of the advantages and disadvantages to student
loan borrowers associated with income-driven repayment plans (e.g.,
Income-Based Repayment, Pay As You Earn, and Revised Pay As You Earn);
f. The presentation of information regarding how borrowers can
obtain more information about repayment options;
g. The presentation of the current and future monthly amount for
the repayment plan;
h. The description of the cost associated with the repayment plan,
including the depiction of future monthly payment amount and
description of the impact of repayment plan selection on total lifetime
loan costs;
i. The visual representation of information contained in these
written communications; and
j. The means by which a borrower is provided with this information
(e.g., periodic statement, routine email communication, stand-alone
written communication, online payment portal, etc.).
3. The Bureau seeks feedback on the appropriate audience for this
Playbook. In particular, please provide feedback related to the
efficacy and applicability of this Playbook to specific populations of
student loan borrowers, including, for example:
a. Borrowers who are current on their student loans (i.e., have no
past-due student loan balance);
b. Borrowers who are at risk of delinquency;
c. Borrowers who are delinquent on one or more student loans;
d. Borrowers who have missed multiple monthly student loan
payments;
e. Borrowers who are at imminent risk of default;
f. Borrowers who have previously been in default, including
borrowers who have successfully rehabilitated defaulted loans;
g. Borrowers who have high levels of student indebtedness;
h. Borrowers who have not completed a program of study;
i. Borrowers who attend certain categories of institutions of
higher
[[Page 26534]]
education (e.g., four-year college, community college, for-profit
college, vocational school);
j. Borrowers who are currently enrolled in an income-driven
repayment plan;
k. Borrowers who are in school or in a grace period;
l. Borrowers with Direct Loans;
m. Borrowers with Federal Family Education Loan Program (FFELP)
loans;
n. Borrowers with Perkins loans;
o. Parents with loans made through the PLUS program; and
p. Borrowers with Federal Consolidation Loans or Direct
Consolidation Loans.
Section II. Specific Questions to Borrowers About Elements of Payback
Playbooks A and C
To supplement this request for information, the Bureau launched a
consumer-facing landing page soliciting feedback on these prototype
Payback Playbooks.\23\ The Bureau developed the following specific
questions for individual student loan borrowers, in order to better
understand how the Playbook could most effectively serve their needs.
Although all commenters are encouraged to review this request for
information in its entirety, consumers should consider following
questions when evaluating these prototype borrower communications:
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\23\ https://www.consumerfinance.gov/payback-playbook.
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1. How would the Playbook help you understand and evaluate the
options you have to pay your student loan if it reflected your likely
payments based on your actual income?
2. How could the Playbook better provide you with important
information about your repayment options?
3. How would it be best to see the Playbook (e.g., in monthly
billing statements, when you log on to your account online, etc.)?
4. At what point during repayment would you like to receive
personalized information about available repayment options (e.g.,
during your grace period, during repayment, etc.)?
Section III: General Questions About the Communication of Information
to Student Loan Borrowers in Repayment
The following questions solicit input from the public about the
effects of increased disclosure of information regarding repayment
options in written communications to student loan borrowers from
student loan servicers.
1. How could personalized information related to repayment options,
including income-driven repayment plans, affect consumer decision-
making? Personalized information means repayment information based on a
borrower's personal information, including income and family size.
2. Please provide any additional relevant information related to
written communications with student loan borrowers regarding repayment
options, including, for example:
a. Examples of existing written communications provided to student
loan borrowers;
b. Information about the advantages and disadvantages of such
communications, including any relevant information related to
implementation, operations, and maintenance associated with
dissemination of these communications;
c. Information related to privacy and data security considerations
when populating and disseminating information about borrowers' loans,
income information, or other sensitive financial or personal
information, including protecting the privacy of borrowers in
electronic communications like email or text message;
d. Feedback about information systems and other technical
considerations when populating and disseminating personalized
information about student loans, including any feedback about existing
information systems that provide accurate, personalized information to
consumers with student loans;
e. Information about the availability, cost, and accuracy of
potential data sources that include the income and family size of
student loan borrowers; and
f. Information about the use of consumer data, in order to populate
information contained in personalized communications.
3. How could the communication channel (e.g., U.S. Mail, email,
SMS, online portal) used to deliver borrower communications affect
borrower engagement (e.g., email open rates, click-through rates,
inbound telephone calls)?
4. How could personalized information obtained to populate written
communications be adapted to enhance oral communications with
consumers?
5. Please provide any relevant information about the applicability
of personalized communications to different segments of the student
loan market (i.e., private student loans, guaranteed loans made under
the Federal Family Education Loan Program, and Direct Loans).
6. How could the visual presentation of information, including the
presentation of additional or supplemental information in electronic
communications, affect consumer decision-making when repaying student
loans?
Dated: April 25, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2016-10327 Filed 5-2-16; 8:45 am]
BILLING CODE 4810-AM-P
