CFPB issues report responding to public input on student loan affordability

The Consumer Financial Protection Bureau today issued this report entitled "Student Loan Affordability–Analysis of Public Input on Impact and Solutions." The report's executive summary appears after the jump.

The agency also issued this companion fact sheet.

The fact sheet includes what it calls "Student Loan Debt by the Numbers":

• $1.1 trillion: Approximate amount of outstanding student loan debt—second only to mortgages in household debt.
• 1-in-5: U.S. households that have student loans.
• $26,682: Average outstanding balance for a borrower with student debt.
• 1-in-8: Share of borrowers with more than $50,000 in student debt.
• 40 percent: Share of American households headed by someone under 35 that have student loan debt.
• 25 percent: Share of borrowers under age 30 that spend more than 10 percent of their income on student loan payments.
• 30 percent: Share of borrowers in repayment that are delinquent on a student loan.
• 6.7 million: Number of borrowers who are more than 90 days delinquent on a student loan.
• 31 percent: Percentage increase in the number of student loan borrowers between 2007 and 2012.


# In October 2012, a CFPB report noted that many borrowers of private student loans in periods of
temporary hardship have been unable to negotiate affordable repayment plans with their lenders and
servicers. Unlike federal student loans, private student loans generally do not allow for affordable
repayment options, such as those where payments are contingent on borrower income. The lack of
options may lead to damaged credit, potentially inhibiting the borrower’s future economic participation.
In addition, even borrowers who were not struggling noted that they have been unable to refinance their
high-rate student loans in order to lower their monthly payments.

# In February 2013, the CFPB published a notice in the Federal Register soliciting input on potential
solutions to offer more affordable repayment options for borrowers with existing private student loans.
A broad cross-section of organizations and individuals submitted comments to the CFPB discussing the
potential impact of rising student debt levels on the economy and society. These comments described
the impacts of high student debt burdens on homeownership, small business formation, retirement
security, and other sectors. These comments supplement recent concerns raised by a number of
monitors of the financial system.

# In 2008, as credit markets showed signs of distress, policymakers intervened in the student loan
marketplace to facilitate lending by private financial institutions. Many borrowers taking on these loans
graduated in a difficult economy and are struggling to manage high student debt burdens.

#  Commenters suggested a number of options for policymakers to spur affordable repayment options on
private student loans so that a substantial number of consumers might participate more fully in the
economy. Some commenters put forth potential principles should policymakers pursue programs that
would encourage lenders to make concessions and restructure loans. Commenters also described
opportunities for private student loan borrowers to repair their credit if they successfully repay a
restructured loan. Others suggested mechanisms to jumpstart a refinance market, so that borrowers
might better take advantage of today’s interest rate environment and their improved credit profile.

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