Consumer Financial Protection Bureau Attention: Monica Jackson
Office of the Executive Secretary 1700 G Street NW
Washington, DC 20552
Re: CFPB-2016-0018-0001, Comments on Request for Information Regarding Student Loan Borrower Communications www.regulations.gov/#!documentDetail;D=CFPB-2016-0018-0001
Dear Ms. Jackson,
Young Invincibles (YI) thanks the Consumer Financial Protection Bureau (CFPB) for requesting comments on their proposed “Payback Playbook”, a simplified tool to help borrowers understand their student loan repayment options. YI is a non-profit advocacy organization working to advance economic opportunities for young adults ages 18 to 34 in the areas of health care, higher education and economic security.
Over the last several years, Young Invincibles has talked to young adults across the country about their first-hand experiences with loan servicing and has heard time and again from students who are confused or misinformed by their servicers. In 2015, we conducted a survey of over 1200 borrowers that yielded the following results:
- 54% of borrowers felt that their servicer had made it more difficult to repay their student loans.
- 37% of borrowers felt that they had not received timely or accurate responses from their servicer.
- 39% of borrowers who contacted their servicer to change their repayment plan to lower their monthly payments did not reach a positive outcome.
- 32% of borrowers reported that when their student loan servicer changed, they experienced problems repaying their loans as a result.
- Almost half of the over 1,200 respondents took the time to write out descriptions of problems they have had with their servicers.
These survey results support the thousands of anecdotal stories YI has heard for years from borrowers about the problems encountered when dealing with servicers. Even more problematic is that the majority of survey respondents had completed college or graduate school and are more likely to have the means to repay their loans. This leads to two conclusions. First, the system is so ineffective and difficult to navigate it stymies borrowers who have the means to repay and may have more experience navigating complex systems. Second, borrowers without a degree who are in the most danger of delinquency and default too often cannot get the help they need to avoid negative outcomes.
We are hopeful that a streamlined tool like the Payback Playbook can be effective in reaching the huge population of borrowers that experience these difficulties. The proposed tool appears to present clear, yet contrasting, repayment options to the borrower. We’ve heard from young people that information that is unique to their situation and contains a limited number of distinct choices is preferable to general information with several choices. In light of that, YI recommends:
- The Playbook is linked to on the borrower’s home page on their servicer’s website. We hope this would ensure that borrowers are always aware there is a tool to view some of their repayment options in clear language.
- The Playbook is emailed to borrowers every month during their grace period until they select a repayment plan, as well as appearing unprompted every time the borrower logs on until they select a repayment plan. Preventing delinquency and default is best done before the borrower enters into either situation, and ensuring clear information for borrowers at the beginning of their repayment process should be helpful.
- The Playbook appears unprompted at regular intervals when a borrower logs into their account, regardless of borrower status.
- The Playbook is emailed to borrowers annually, timed to coincide when they will be required to re-certify if enrolled in an income-based plan.
- The Playbook appears unprompted every time a delinquent or defaulted borrower logs into their account, until the delinquency or default is positively resolved. Preventing negative outcomes for borrowers is essential, and every opportunity should be used to get borrowers into plans that work for them.
- The Playbook page for delinquent and defaulted borrowers offers the plan that will result in the lowest monthly payment.
- The Playbook page for non-delinquent borrowers clearly states that there are more than the three plans visually represented available, and the information located on the bottom of the page on additional plans is made slightly larger. While simplified choices are a good gateway to the borrower understanding they can change their plan, until the system is further simplified, access to information on all plans should remain available.
- The Playbook should also be mobile-friendly. Many young people are smartphone- dependent.
We are hopeful these recommendations will be responsive to the needs of borrowers.
Thank you for the opportunity to comment on the proposed Payback Playbook proposal. We hope that the Consumer Financial Protection Bureau finds our input valuable and we look forward to continuing to work together. For more information, please contact Reid Setzer, at firstname.lastname@example.org or at 609-379-0123.