CFPB Proposes New Guide for Student Loan Repayment
The Consumer Financial Protection Bureau has released a new proposal for the information student loan servicers provide students about their repayment options. The proposal’s goal is to make repayment options more transparent and specific to each student, so the borrower fully understands the terms of the loan.
The prototype provides an outline for how lenders would present repayment options to students. This information would include information tailored specifically for each student, including payment amounts for the different repayment options they may select. Under the new policy, lenders would be required to provide up-to-date information to borrowers if their plans change in order to prevent the possibility of late or delinquent payments.
The CFPB is requesting that lenders describe their repayment options in “clear language” so borrowers can assess which option will be best for their needs and budget. This may also prevent people from signing up for a repayment plan they simply cannot afford.
Members of the public can comment on the new proposal until June 12th. After that time, the Department of Education will use comments from the public and the original information from the CFPB to potentially formulate a new structure for student loan servicing practices. All of this will pay a role in the departments “new vision” for serving student loan borrowers, aimed at protecting the 40+ million Americans who currently have student loans to pay off.