The CFPB has issued a Request for Information (RFI) seeking comment on a set of prototype disclosures to assist federal student loan borrowers in selecting between alternative repayment plans. Comments are due on or before June 12, 2016.
Referred to by the CFPB as “the student loan Payback Playbook,” the prototypes consist of three potential Playbooks. Playbooks A and B provide information about the borrower’s current repayment plan and two alternative repayment plans. One alternative is a plan with an amortizing payment schedule (e.g. graduated repayment, extended repayment, extended-graduated repayment) and the other is an income-driven repayment plan (e.g. Pay As You Earn, Income-Based Repayment, Income-Contingent Repayment). According to the CFPB, Playbooks A and B are identical, other than the description of income information and estimated payment amount under an income-driven repayment plan. With respect to such plans, Playbooks A and B “present two approaches to personalization.” Playbook A offers “a more precise estimate of a monthly payment” and “informs the borrower that this estimate was derived from actual information about his or her income and family size.”
Playbook C is intended for borrowers who are at risk of default (such as a borrower who has missed payments, not completed a program of study, or exhibits other criteria predictive of future financial distress.) It provides information on a single income-driven repayment plan, and includes a personalized description of the estimated monthly payment.
The RFI seeks general feedback on the three Playbooks, feedback on a list of issues related to specific elements of the Playbooks, and feedback on the Playbooks’ “efficacy and applicability” to specific populations of student loan borrowers listed in the RFI. In addition, the CFPB has added a page to its website through which it is soliciting feedback from borrowers on a series of questions about the Playbooks. The RFI also contains a list of general questions on which the CFPB is seeking 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.”
The RFI indicates that the Playbooks’ development was informed by the CFPB’s May 2015 RFI on student loan servicing that sought public input on all aspects of student loan servicing, including industry practices that may create repayment challenges or hurdles for distressed borrowers and economic incentives that may affect the quality of service. The CFPB’s press release also describes the RFI as building on the Joint Statement issued by the CFPB, Department of Education (ED), and Department of the Treasury in September 2015 which presented a framework for standardizing student loan servicing practices across the various federal and private borrowing programs. According to the RFI, comments received by the CFPB may be used in connection with the ED’s development of the disclosures that it must require student loan servicers to provide pursuant to the Student Aid Bill of Rights issued by President Obama in March 2015.
The RFI was accompanied by the CFPB’s release of a guide for servicemembers entitled “Tackling student loan debt.” The guide describes federal and private student loan protections and repayment options available to servicemembers.