CFPB Issues Report, Holds Field Hearing on Student Loan Relief Policy Options

CFPB Student Lending

On May 8, the CFPB issued a report regarding student loan affordability and related policy issues. The report summarizes and analyzes public responses to the CFPB’s request for information and discusses policy options for addressing these issues.  In particular, the paper explores policy options for restructuring student loans, including, for example, allowing distressed private loan borrowers to convert their obligations into federal student loans, which would allow them to accesses certain income-based repayment and other benefits available to federal loan borrowers, and options for a public-private loan restructuring program. The paper also identifies multiple policy options for jumpstarting the refinance market, including creating a “centralized source on private student loans[, which] could create the conditions and data standards for the emergence of an auction-like marketplace for refinance activity.” The paper states that compliance with existing laws on origination, servicing, and collection of student loans is also critical. On the same day the report was issued, the CFPB held a field hearing at which CFPB Director Richard Cordray, other CFPB officials, and industry and consumer groups discussed many of the issues presented by the CFPB information request and report, including the effects  of student debt burdens on individuals and the broader economy, and potential debt relief policy options.