After reanalyzing certain sample loan level data, the CFPB announced that it is not making any changes to the key findings and recommendations in its July report to Congress on private student loans.  The CFPB had posted a “research note” on its website to accompany the report disclosing that it had been informed by the lenders who provided the sample lender loan level data that the manner in which it had analyzed certain data could produce incomplete results.  The CFPB indicated that it would reanalyze the data in light of the lenders’ advice. 

The “research note” has now been removed. Initially, the results of the CFPB’s reanalysis were reflected in an updated report and separate guide to the updates.  The guide has since been replaced by a new summary.  The guide had indicated that the “most material change” to the report’s conclusions was that, although still significant, there was less “direct-to-consumer” (DTC) borrowing during 2005-2007 than the report had originally found.  The summary no longer describes the change as “material” but instead refers to it as “notable.”  Either way, despite the lower frequency of DTC borrowing, and the fact that the report now seems to indicate that lenders learned to manage the risks of over-borrowing appropriately, the CFPB is standing by its finding that there is a greater risk of consumer harm in DTC lending programs.  It is likewise standing by its recommendation for mandatory school certification to address that risk.  

To buttress that finding and the related recommendation, the updated report includes a new “Figure 7A” which compares the median ratio of total loan balances to tuition and fees during the period 2004-2011 for school-certified loans with the corresponding median ratio for DTC loans.  According to the CFPB, “[w]ith the additional perspective provided by Figure 7A, the relationship between DTC lending and elevated levels of borrowing becomes clearer.” 

Perhaps concerned about making a change favorable to lenders, the CFPB also updated the report to specifically state the percentage of private student loan borrowers who did not exhaust their Stafford loan options.  The guide had stated that, in addition to the advice the CFPB received from the sample lenders, “[o]ther industry observers also made inquiries about  the extent of exhaustion of federal Stafford Loans by private student loan borrowers.”  The summary now indicates that the change resulted from “feedback from industry experts.” Whereas the report originally stated that 45% of borrowers with Stafford and private loans did not borrow their individual Stafford loan maximum, the report now states that 54% of students who took a private student loan did not borrow their individual Stafford loan maximum.  The numbers do not appear to have changed; instead, the CFPB simply included in its calculations those borrowers who took private student loans but no Stafford loans. 

We assume the CFPB is breathing a sigh of relief that the reanalysis did not force it to change its findings and recommendations but wonder why it felt the need to change its descriptions of the results of its reanalysis.