In a new blog post, the CFPB tells borrowers, that in response to its solicitation of borrower “stories” about problems with student loans, it has heard “about problems related to enrolling in income-driven repayment plans that ended up costing you hundreds of dollars in unexpected payments.” The blog post includes “some helpful advice and information” for borrowers enrolled in such plans which details the potential consequences a borrower can experience if the borrower’s recertification under such a plan “is not processed on time.” (The CFPB references information about recertification rates released by the Department of Education noting that 57 percent of all borrowers in its sample missed their deadline to recertify.)
The blog post also indicates that the CFPB is sending a letter “to student loan companies asking for more information about how they make sure student loan borrowers have the information they need to stay on track.” In the letter, the CFPB states that its preliminary analysis of input received in response to its May 2015 request for information about student loan servicing “has identified a number of consumer comments reporting issues related to seeking to obtain affordable monthly payments.” The letter seeks information about income-driven repayment plans from companies that “hold or service a portfolio of privately-held legacy federally-guaranteed (commercial FFEL) loans or federal Direct Loans.”
More specifically, the CFPB requests information related to Income Based Repayment (IBR) utilization in a company’s FFEL portfolio and both IBR and Pay As You Earn utilization in a company’s Direct Loan portfolio. The CFPB asks companies to provide information on:
- Policies and procedures related to recertification for income-driven repayment plans
- Enrollment in income-drive repayment plans
- Recertification for income-drive repayment plans
- Late recertification for income-drive repayment plans
- Outcomes for borrowers enrolled in automatic payments and who do not complete a timely recertification
- Utilization of forbearance when borrowers fail to recertify
The letter indicates that responses are voluntary and that the CFPB “may make public certain information we gather in response to this request, but we will not identify any specific market participants.”