CFPB Initiative to Promote Student Loan Payment Plans

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The Consumer Financial Protection Bureau (“CFPB”) responding to the growing amount of student loan debt, has initiated a request for information “to determine options that would increase the availability of affordable payment plans for borrowers with existing private student loans” on February 27, 2013. Comments must be received on or before April 8, 2013.

Among other things, the notice and request for information from the public published in the Federal Register, continues the process of the CFPB’s exploration of opportunities to spur refinance and modification activity in the private student loan market. Specifically, the request seeks information on options to increase the level of affordable repayment options for both pre-default and post-default borrowers in distress who wish to repay their loans but may be lacking near-term ability to service their obligations.

According to the CFPB, there are more than 38 million student loan borrowers with over $1.1 trillion in outstanding debt. Further, a recent report by the CFPB and Department of Education submitted to Congress found that “as of the end of 2011, there were more than $8 billion in defaulted private student loan balances, with even more in delinquency.”

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