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April 28, 2016 at 10:00 AM
The White House, along with the Consumer Financial Protection Bureau, wants to help student loan borrowers get some relief. More specifically they want to get more borrowers who are late on payments or in default enrolled in one of several debt repayment plans.
To that end, Education Secretary John King and CFPB Director Richard Cordray announced this week two new initiatives to help struggling borrowers of federal student students find a repayment option that works for them.
One in four of the 43 million student loan borrowers are delinquent on their loan payments or in default, said Richard Cordray, director of the CFPB, and 70% of those borrowers would qualify for a lower monthly payment under government repayment plans, according to the GAO. But currently just under 5 million are enrolled in repayment plans, including the Pay as You Earn plan, which caps monthly payments at 10% of income, said Education Secretary John King. He wants two million more borrowers enrolled in those easier payment plans “by this time next year,” said King.
King announced a new website StudentLoans.gov/repay that helps students find the best repayment option and said the Education Department is working on a one-stop shop where borrowers can more easily manage their loan payments. “What’s clear, based on our analysis, is that there are student borrowers out there today who could benefit from income-based repayment and haven’t yet taken advantage, said King, in response to a question. “We want to make sure that they get the information they need.”
Cordray of the CFPB announced the Payback Playbook, which will allow borrowers to compare different repayment plans to the standard 10-year fixed payment plan. “Borrowers have the right to choose among different plans, but they first need to know what their options are,” said Cordray. They also need accurate information from loan servicers about account features, loan terms and borrower protection.”
