The federal agency that protects borrowers from abusive or misleading practices has unveiled a student loan “Payback Playbook”, basically a set of options that loan servicers will make available on monthly bills.
These options will help many borrowers establish monthly payments they can afford, according to the U.S. Consumer Financial Protection Bureau.
These “prototype disclosures” outline a path to affordable payments for borrowers trying to avoid student debt distress, the CFPB says. Loan servicers will also make the Payback Playbook available to borrowers “in regular email communications from their student loan servicers, or when they log into their student loan accounts.”
“Millions of consumers needlessly fall behind on their student loan debt, despite their right under federal law to a payment they can afford,” said CFPB Director Richard Cordray.
Cordray said that the Payback Playbook evolved out of the CFPB’s work with Illinois Attorney General Lisa Madigan and her colleagues.
It is “designed to help ensure student loan servicers provide personalized information, tailored to the borrower’s individual situation,” Cordray said. “This will help these borrowers take action, stay on track, and steer clear of financial distress.”
About 43 million Americans owe student loan debt, with outstanding debt estimated at $1.3 trillion.
The Department of Education provides plans to borrowers with federal student loans that help make payments more affordable. These include programs that let borrowers set their monthly payment based on their income.
Repayment plan options for federal loans have expanded in recent years, but record numbers of student borrowers continue to struggle with debt.
The CFPB states that: “One out of four student loan borrowers are currently in default or scrambling to stay current on their loans, despite the availability of income-driven repayment options for the vast majority of borrowers.”
View the Payback Playbook.