The Consumer Financial Protection Bureau (CFPB) called for better information from the nation’s largest student loan servicers in a request from the agency. In an effort to better understand the repayment of student loan debt, the CFPB is targeting the borrowing habits of those who are having financial difficulties.
The student loan data initiative is a new information collection movement that is dubbed the “Student Loan Servicing Market Monitoring.” This is part of the CFPB’s continued efforts to protect and assist at-risk borrowers. The Bureau is looking at the total size of the student loan market, the number of borrowers interested in income-driven repayment plans, borrowers who are in the most danger of defaulting on their student loans, and borrowers with private loans who are in financial distress.
The CFPB was formed through the Dodd-Frank Wall Street Reform and Consumer Protection Act which was passed into law July of 2010. It’s main purpose is to protect consumers by holding various different companies in the financial sector accountable for their policies and services. Student loan servicers, student loan lenders, and student borrowers all fall under this umbrella with borrowers receiving protections from the lenders and servicers.
Today, there are currently more than 44 million Americans with a cumulative $1.4 trillion in debt. The average student loan borrower has $28,400 in debt upon graduation. Many borrowers are finding it increasingly difficult to make their monthly payments; in fact, the national student loan default rate is around 11%.
One specific group of borrowers has faced an acute difficulty with student loans and higher education, namely students attending for-profit colleges. Several different for-profit colleges have closed down over the past few years. ITT Tech is a famous example of a for-profit closure, and several accreditation agencies received heat in the aftermath.
At any rate, the CFPB helped roll out protections for these affected borrowers such as the gainful employment rule, a policy that holds for-profit colleges accountable for their education standards. This is just one example of actions taken by the CFPB, but its days may be numbered with Donald Trump taking his place in the Oval Office. There is much speculation about President Trump’s plans with the CFPB as many expect fewer regulations on business in general in the coming months.
Image Copyright Ted Eytan. (Edited)