Comments Regarding an Initiative to Promote Student Loan Affordability

Monica Jackson
Office of the Executive Secretary
Consumer Financial Protection Bureau
1700 G Street NW
Washington, DC

Dear Sir or Madam:

We are writing on behalf of millions of students struggling with their student loans. Young Invincibles is a non-profit organization dedicated to expanding economic opportunity for young adults. Student Debt Crisis is a non-profit advocacy organization dedicated to reforming funding for higher education in America. Together, we interact with over 1 million student loan debtors through our research, outreach, education, and advocacy work, and are pleased to provide our feedback to the CFPB’s “Request for Information Regarding an Initiative to Promote Student Loan Affordability.”

The Bureau’s Request for Information (“RFI”) included several key questions about the experience of distressed borrowers in trying to secure affordable payment plans. Young Invincibles and Student Debt Crisis converted the key consumer experience questions into a survey, and sent an invitation to take the survey to over 1 million people on our email lists. Of those invited to participate, 9,523 individuals with private loans completed the survey. It was open from March 20th, 2013 to April 3rd, 2013.

This is a self-selected cohort of borrowers, and so our results do not necessarily represent the experiences of larger population of individuals. However, most, if not all, of the participants joined our online membership to participate in our work around student loan issues. This online participation in both our actions and a survey of this nature further indicates a high level of concern, if not distress, about their private loan payments – and the substance of these responses corroborate that indication. In fact, given the nature of responses, we can say with confidence that these responses reflect the concerns of borrowers facing a high degree of debt and daily struggle. Specifically, of the survey respondents,

  • About 15 percent of borrowers said they had been denied a mortgage because of their debt.
  • About 28 percent of respondents had taken on credit card debt to keep up with loan payments; 46 percent cut out services like cable or internet.
  • 35 percent borrowed from friends or family to keep up.
  • About 47 percent said they put off buying a house, and the same percentage said they put off buying a car, to keep up with their payments.

These numbers indicate a high level of financial distress among private loan borrowers. Further, the responses below reveal the unfortunate reality that private lenders are unwilling to work with struggling borrowers who either simply cannot make their monthly payments, or who are looking to lower payments in order to engage in other substantial life transitions such as purchasing a home or car. These trends should serve as a wake-up call to legislators, regulators, industry, and all interested parties about the potentially devastating impact that private loan debt can have on both individual financial opportunity and the health of our economy as a whole.

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