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Obama administration introduces student loan servicing disclosures

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Obama administration introduces student loan servicing disclosures

As part of an Obama administration initiative to helpstudent loan borrowers pay back their debt, the Consumer Financial ProtectionBureau is seeking public comment on a new set of student loan servicingdisclosures, called the Payback Playbook.

The playbook, announced on April 28, gives borrowerspersonalized information about their monthly repayment options and would beincluded in their monthly bill, emails with their student loan servicers orwhen they log into their student loan account.

"Learning is hard enough on its own without living infear of future financial hardship," CFPB Director Richard Cordray said ona press call.

According to a Government Accountability Office study, 70%of default borrowers had an income that would have qualified them for a lowermonthly payment plan, he said. Around 43 million Americans owe an estimated$1.3 trillion in student debt, the CFPB stated in a press release.

The disclosures will be finalized and implemented by theDepartment of Education. Comments on the disclosure will be open until June.  

"One of the things we really hope to garner from thispublic inquiry is at what point in the process is the information most usableand most available for student loan borrowers," said Seth Frotman, CFPB'sstudent loan ombudsman and assistant director for the office for students andyoung consumers.

The Obama administration also announced it wants to enrolltwo million more borrowers in plans such as the President Barack Obama's Pay asYou Earn plan.

"The goal is to get all of the folks who would benefitfrom income-based repayment into one of the plans that makes sense forthem," Department of Education Secretary John King Jr. said on the presscall.

In addition to the playbook, the Department of Education andthe Department of the Treasury released a series of student loan borrowers'rights and expectations. The administration is also working with the creditreporting industry to develop guidance for servicers, lenders and others todetermine how student loan state should be reported.