Comments on the Request for Information Regarding Student Loan Borrower
Communications (Payback Playbook)
Docket No. CFPB-2016-0018
June 12, 2016
The Institute for College Access & Success (TICAS) is an independent, nonprofit organization that works
to make higher education more available and affordable for people of all backgrounds. Through
nonpartisan research and analysis, we aim to improve the processes and public policies that can pave
the way to successful educational outcomes for students and for society. Since 2005, our Project on
Student Debt has been analyzing and raising awareness of the impact of student debt on students,
families, and the economy.
In particular, TICAS has been deeply involved in the development and improvement of income-driven
repayment (IDR) plans for federal student loans. We developed the policy framework and led the
advocacy campaign that resulted in the Income-Based Repayment (IBR) plan, which became law in 2007
and has been available to borrowers since 2009. Since then, we have helped improve IBR and shape the
subsequent income-driven repayment (IDR) plans modeled after it: Pay As You Earn (PAYE) and Revised
Pay As You Earn (REPAYE). Our website, http://ibrinfo.org, raises awareness about the IDR plans as well
as Public Service Loan Forgiveness.
These comments are in response to the Request for Information (RFI) published in the Federal Register
on May 3, 2016. 1 We commend the Consumer Financial Protection Bureau (CFPB) for developing the
prototype Payback Playbooks (“Playbooks”), in conjunction with the Departments of Education and
Treasury. We write to express our strong support for providing federal loan borrowers with clear and
actionable information about their repayment options, but also to suggest a number of ways to further
strengthen these disclosures.
There is an urgent need to improve student loan servicing and ensure that borrowers are able to make
well-informed choices about how to repay their loans. At least 11 million federal loan borrowers have
missed payments on their loans, including a record-high 7.9 million borrowers in default. 2 As
documented by the CFPB as well as in reports and investigations by others, 3 student loan servicing is
1
For more information, see https://federalregister.gov/a/2016-10327.
Calculations by TICAS using data from the U.S. Department of Education, Federal Student Aid Data Center, “Direct
Loan and Federal Family Education Loan Portfolio by Loan Status,” “Direct Loan Portfolio by Delinquency Status,”
and “ED-Held FFEL Portfolio by Delinquency Status,” https://studentaid.ed.gov/sa/about/datacenter/student/portfolio, accessed March 17, 2016.
3
See, for example, CFPB. 2015. Student loan servicing: Analysis of public input and recommendations for reform.
http://files.consumerfinance.gov/f/201509_cfpb_student-loan-servicing-report.pdf. National Consumer Law
Center. 2014. The Sallie Mae Saga: A Government-Created, Student Debt Fueled Profit Machine.
2
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inconsistent, oversight is insufficient, and borrowers lack a clear way to enforce their rights. The result:
too many borrowers cannot count on servicers to provide information and assistance that could help
them make affordable payments and stay out of default. Indeed, poor servicing has spawned a growing
industry of for-profit “debt relief” companies that charge high fees for services that the government is
already paying federal loan servicers to provide at no cost to borrowers. 4
By providing clear and actionable information about repayment plan options, the Playbooks can be a
valuable supplement to the information borrowers currently receive from their loan servicers and help
them stay on top of their payments and out of default. In particular, these Playbooks would increase
awareness of IDR plans, which cap monthly payments based on income and family size, as well as
provide a light at the end of the tunnel by forgiving any remaining debt after 20 or 25 years of
payments. IDR plans are an important safeguard for borrowers who are having trouble affording their
loan payments, and delinquency and default rates under IDR plans are much lower than under the other
repayment plans. 5
In addition to raising awareness of IDR, the prototype Playbooks make clear that borrowers can change
repayment plans for free, which should help prevent borrowers from falling for debt relief scams.
Through consumer-friendly language and simple information about repayment options, the Playbooks
can help borrowers understand that they have options and take the next step to figure out which
repayment plan best serves their needs. Those next steps include using the Department of Education’s
(ED’s) online Repayment Estimator 6 to view payment estimates and eligibility for all the available
repayment plans, talking to their loan servicer about changing plans, and applying for IDR.
To further strengthen the Playbooks, we recommend the following:
1. The Playbooks should be made available to borrowers with FFEL loans, as well as borrowers with
Direct Loans.
2. The Playbooks should include a prominent and direct link to ED’s online Repayment Estimator.
3. The Playbooks should display the extended repayment plan for borrowers who qualify, instead
of the 10-year graduated repayment plan. For IDR options, the Playbooks should display the
REPAYE plan for Direct Loan borrowers and both the IBR and REPAYE plans for FFEL borrowers,
with a note about consolidation.
4. If possible, the Playbooks should present estimated IDR payments for a hypothetical borrower
that is as similar as possible to the actual borrower. If using data to tailor the borrower example,
it is important to be mindful of consumers’ privacy protections and depending on the data
source, it may be appropriate to ask for public comment. If it is not feasible to use data to
http://bit.ly/1HAkcBb. Marian Wang. April 23, 2012. “Student Loan Borrowers Dazed and Confused by Servicer
Shuffle.” ProPublica. http://bit.ly/1hlvfAm.
4
See National Consumer Law Center. 2013. Searching for Relief: Desperate Borrowers and the Growing Student
Loan ‘Debt Relief’ Industry. http://bit.ly/1wn1Nhh.
5
Government Accountability Office (GAO). 2015. Education Could Do More to Help Ensure Borrowers Are Aware of
Repayment and Forgiveness Options. Figure 6: “Loan Status of Direct Loan Borrowers Who Entered Repayment
from Fiscal Year 2010 through 2014, by Repayment Plan, September 2014.” http://www.gao.gov/products/GAO15-663. U.S. Department of Education. 2014. Servicer Summit: Loan Portfolio Briefing Document. Slide 37:
“Repayment Plans and Delinquency Rates.” http://1.usa.gov/1UIwl7q.
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ED’s online Repayment Estimator can be accessed at http://studentaid.gov/repayment-estimator.
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customize the borrower example in the near term, the Playbooks should proceed without using
personalized data about income.
5. The Playbooks will be helpful for borrowers in different repayment statuses, but the language
should be adjusted depending on a borrower’s status, including whether they are in exit
counseling or the grace period, current on their loans, delinquent on their loans, or in a
deferment or forbearance.
6. The CFPB and other relevant agencies should prioritize making Playbooks available to borrowers
who are not already enrolled in IDR.
7. The CFPB should conduct additional consumer testing of the Playbooks to determine which
information is most helpful to include and how it should be presented.
We expand on these recommendations below, as well as provide several suggestions for clarifying
specific language in the Playbook.
Availability to Direct and FFEL loan borrowers
Playbooks should be made available to borrowers with FFEL loans, in addition to borrowers with
Direct Loans. More than four in 10 existing borrowers have FFEL loans, 7 and the CFPB has found that at
least 30 percent of borrowers with FFEL loans have missed payments for more than 30 days. 8 Those
borrowers could benefit significantly from clearer information about their repayment options.
Direct link to ED’s Repayment Estimator
The Playbooks should provide a prominent and direct link to ED’s online Repayment Estimator 9 so
that borrowers can more easily take the next step to see personalized estimates of eligibility and
payment amounts for all the repayment plans. The prototype Playbooks currently display a link to ED’s
“How to Repay Your Loans” page, 10 which covers many topics relating to student loan repayment.
Although that information can be a helpful reference for borrowers, it would be more actionable to
provide a direct and prominent link to the Repayment Estimator in the Playbooks.
The Repayment Estimator allows borrowers to import their actual loan data, use hypothetical loan data,
or average loan balances. After entering their tax filing status, income, family size, and state of
residence, borrowers can view estimated payments and eligibility under all of the repayment plans.
Having easier access to the Repayment Estimator will help borrowers get more personalized information
to figure out whether switching repayment plans makes sense for them.
7
Calculations by TICAS using data from the U.S. Department of Education, Federal Student Aid Data Center,
“Federal Student Aid Portfolio Summary,” https://studentaid.ed.gov/sa/about/data-center/student/portfolio,
accessed March 17, 2016.
8
CFPB. 2015. Annual Report of the CFPB Student Loan Ombudsman.
http://files.consumerfinance.gov/f/201510_cfpb_annual-report-of-the-cfpb-student-loan-ombudsman.pdf. P. 28.
9
http://studentaid.gov/repayment-estimator.
10
https://studentaid.ed.gov/sa/repay-loans.
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Repayment plans to display in the Playbooks
We have several specific suggestions for which repayment plans should be displayed in the Playbooks,
depending on the borrower’s situation. This level of customization should be feasible to implement
using borrower data that loan servicers already have access to.
1. The Playbooks should display the extended repayment plan for borrowers who qualify. This
plan provides fixed payments for 25 years and borrowers can qualify if they have over $30,000
in Direct or FFEL loans (separately in each program). Extended repayment is another option for
lowering monthly payments compared to the 10-year fixed repayment plan. In some cases,
extended repayment can provide lower monthly payments than the IDR plans, and it does not
require annual income documentation like IDR.
2. The Playbooks should not display the 10-year graduated repayment plan. Although graduated
repayment may be appropriate for some higher earning borrowers, it carries many more risks
for lower income borrowers than IDR plans. Payment amounts in graduated repayment start out
low, but rapidly escalate even if borrowers’ incomes do not increase at the same rate. In
contrast, borrowers whose incomes remain low will be able to keep their low monthly payments
for multiple years in IDR. Borrowers who are interested in graduated repayment can use ED’s
Repayment Estimator to view payment estimates for that plan and compare them to payment
estimates in IDR using their actual income and family size.
3. The Playbooks should generally display the REPAYE plan for Direct Loan borrowers, while
making clear that other IDR plans may be available as well. The exception is for borrowers with
Parent PLUS loans or consolidation loans that repaid Parent PLUS loans, because those loans are
not eligible for REPAYE.
a. The Playbooks should use the most widely available IDR plan for Direct Loans to avoid
showing borrowers a plan that they are ultimately not eligible for. REPAYE is more
widely available than IBR and PAYE because it does not restrict eligibility based on when
borrowers took out their loans or based on borrowers’ debt-to-income ratio (“partial
financial hardship”). 11 It will be difficult to determine whether a borrower has a partial
financial hardship to qualify for IBR and PAYE without accurate data on the borrower’s
income, which may also require information about the borrower’s marital status, tax
filing status, and spouse’s income. Borrowers who are interested in IBR and PAYE should
be directed to ED’s Repayment Estimator to enter their actual income and family size
information to see if they may be eligible for lower monthly payments or a shorter
repayment period in a different IDR plan.
b. Using REPAYE means that the Playbooks should not include the statement, “payments
will never be higher than $XX”, because REPAYE does not have a standard payment
cap. 12 Monthly payments in REPAYE will always be calculated as 10% of discretionary
income, regardless of the borrower’s debt-to-income ratio.
11
Borrowers have a “partial financial hardship” (PFH) if their calculated payment based on income and family size
is less than what they would pay under the fixed 10-year repayment plan.
12
In IBR and PAYE, monthly payments are capped at the “permanent standard” amount – the monthly amount the
borrower would have had to repay had she entered a 10-year fixed repayment plan with what she owed when she
entered IBR or PAYE. This “standard payment cap” does not exist in PAYE.
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c. When estimating the number of payments remaining in REPAYE, loan servicers will need
to check whether the borrower is repaying any debt from graduate school. Borrowers in
REPAYE who have any graduate school loans are required to make 25 years of payments
on all of their loans before any remaining balance is discharged. Borrowers in REPAYE
who have only undergraduate debt would have a 20-year maximum repayment period.
4. The Playbooks should generally display both the IBR and REPAYE plans for FFEL borrowers,
with a note that borrowers would have to consolidate their FFEL loans into a Direct
Consolidation Loan to make them eligible for REPAYE. The exception is for borrowers with
Parent PLUS loans or consolidation loans that repaid Parent PLUS loans, because those loans are
not eligible for IBR or REPAYE.
a. IBR is the only IDR plan that these borrowers can directly enter without consolidating
their FFEL loans into a Direct Consolidation Loan. There is value in having the Playbook
display the easiest IDR option for FFEL borrowers, particularly for those who have
already missed payments and may be less likely to switch to IDR if it requires the extra
step of consolidation. However, the Playbooks should make clear that not all borrowers
qualify for IBR, based on their debt-to-income ratio.
b. FFEL borrowers should also be made aware that they may have lower monthly
payments under REPAYE than under IBR. In addition to displaying payment estimates for
REPAYE, the Playbooks for these borrowers should include a link to information about
the pros and cons of consolidation (e.g., ED’s consolidation webpage).13
5. The Playbooks should display the Income-Contingent Repayment (ICR) plan for borrowers
with Parent PLUS loans or consolidation loans that repaid Parent PLUS loans. ICR is the only
IDR plan available to borrowers with Parent PLUS loans, and they would need to consolidate
them into a Direct Consolidation Loan first. The Playbooks should include a link to information
about consolidation and caution these borrowers against including any other loans when
consolidating, since their resulting Direct Consolidation Loan would only be eligible for ICR,
which generally provides higher monthly payments than the other IDR plans. Their other loans
may be eligible for lower monthly payments under a different IDR plan, if not consolidated with
their Parent PLUS loans.
Personalization of IDR estimates
As mentioned in the RFI, customizing the payment estimates in the Playbooks may make the
information more actionable and relevant to borrowers. If data are available, the Playbooks should
present estimated IDR payments for a hypothetical borrower that is as similar as possible to the
actual borrower.
We recommend that the Playbooks not suggest that loan servicers know the borrower’s exact income
and family size, as in Playbook A. That approach may generate alarm among some consumers who are
unaware of the source of that information. Also, if the data on income and family size are not accurate,
the IDR payment amounts may end up being misleading and borrowers may not actually qualify for the
IDR plan displayed.
13
https://studentaid.ed.gov/sa/repay-loans/consolidation.
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Instead, we recommend using the approach in Playbook B, which presents estimated monthly payments
for a hypothetical borrower (e.g., “Based on an income of $30,000 and family size of two…”). If available,
data should be used to make the hypothetical borrower as similar as possible to the actual borrower, so
that a low-income borrower sees IDR payment estimates based on a low income and a high-income
borrower sees estimates based on a higher income. That way, borrowers will be able to compare
repayment plans using information that is more applicable to their own situation.
Note that if borrower data are used to tailor the Playbooks, it is important to ensure appropriate data
privacy and security protections. Depending on the data source, it may be appropriate to ask for public
comment before proceeding.
If it is not feasible to use data to customize the hypothetical borrower scenarios in the near term, the
Playbooks should proceed without using personalized data about income. Instead, the Playbooks
should use the same hypothetical borrower example for all borrowers who are current on their loans,
but display IDR estimates based on a low income for borrowers who have missed payments. Borrowers
would benefit from seeing clear information about their repayment options sooner rather than later,
even if the IDR estimates are not customized.
Additionally, it will be important to consider the implications of using different assumptions of family
size for calculating monthly payments in IDR. For simplicity, the Playbook could assume a family size of
one for all borrowers, with a note that payment amounts in IDR will be lower if the borrower is
supporting others in his or her family. This approach would avoid misleading borrowers with payment
amounts that are artificially low, as well as avoid the complication of trying to guess how many wage
earners and dependents are in the borrower’s family. As mentioned earlier, the Playbook should
prominently point borrowers to ED’s Repayment Estimator, where they can enter their exact income
and family size to see personalized payment amounts and eligibility for all the repayment plans.
Presentation of IDR estimates
We have several specific recommendations about the presentation of IDR estimates in the Playbooks.
1. Payment and income amounts for the hypothetical borrower scenario should be rounded,
rather than giving exact figures. This would help communicate that the figures are estimates,
not guarantees of specific payment amounts.
2. The Playbook should make clear that the IDR payment estimates are based on certain
assumptions and that actual payment amounts may be different.
3. It is helpful that the prototype Playbooks point out that payments in IDR can be as low as $0.
We recommend keeping the language, “if you recently lost your job or make less than $XX,XXX,
payments may be as low as $0.”
4. The Playbooks should state that monthly payments will never be higher than a certain
percentage of income or a certain dollar amount, depending on the plan. If displaying REPAYE,
the Playbooks should state that payment amounts will never be higher than 10% of income. If
displaying IBR or PAYE, the Playbooks should state that payment amounts will never be higher
than the 10-year standard payment (calculated out as a dollar figure). If displaying ICR, the
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Playbooks should state that payment amounts will never be higher than 20% of income.
5. The Playbooks should make clear that the monthly payment estimate in IDR plans only applies
to the first year. This recommendation also applies to the graduated repayment plan if it is
displayed on the Playbooks, though we have recommended removing that plan from the
Playbooks.
Customization for borrowers in different repayment situations
It would be helpful to provide different versions of the Playbooks to borrowers in the following
situations:
1. Borrowers during exit counseling and in the grace period, who have not yet selected a
repayment plan. In these cases, the Playbooks should not compare plans to the borrower’s
current plan. Instead, the Playbooks could compare the 10-year fixed repayment plan with IDR
and extended repayment (if the borrower qualifies).
2. Borrowers who are current on their loans, as illustrated in Playbook B.
3. Borrowers who are delinquent. Playbook C is targeted at borrowers who have missed payments
and we agree that it would be beneficial to highlight IDR for those borrowers.
a. For borrowers who have missed payments, it would be helpful to more prominently
feature the text, “your account is XX days overdue.” That text could be displayed in a
different color or a larger size than other text in the Playbook.
b. As we mentioned in coalition comments signed by TICAS and 71 other groups that
advocate for students and consumers, 14 the Playbooks should include specific language
for borrowers who are severely delinquent. To create a sense of urgency and prompt
borrowers to take action, the Playbooks should include the number of days left before
the borrower’s loan goes into default as well as the consequences of default.
4. Borrowers who are in a deferment or forbearance related to unemployment or other financial
hardship. We agree with the National Consumer Law Center (NCLC) that borrowers who have
postponed repayment for one of these reasons would benefit from effective communications
about options to lower their payments. 15 Many of these borrowers would be better off in IDR
plans, which provide a more permanent solution than temporary deferments and forbearances.
Playbooks for these borrowers should make clear the pros and cons of entering IDR compared
to remaining in a deferment or forbearance.
We do not recommend providing Playbooks to borrowers who are in default, because those borrowers
would need a different set of information about how to get out of default before entering an IDR plan.
14
Coalition comments in response to the CFPB’s “Request for Information Regarding Student Loan Borrower
Communications.” June 12, 2016. http://bit.ly/1tmGGzM.
15
Comments submitted by the National Consumer Law Center (NCLC) in response to the CFPB’s “Request for
Information Regarding Student Loan Borrower Communications.” June 10, 2016. http://1.usa.gov/1S2M1k8.
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Prioritize making Playbooks available to borrowers who aren’t already in IDR
The Playbooks will be most helpful for borrowers who are seeking to lower their monthly payment and
are not already enrolled in an IDR plan. Therefore, we recommend that the CFPB and other relevant
agencies prioritize making the Playbooks available to borrowers who are not yet in IDR.
Additional consideration will be required when designing Playbooks for borrowers who are already in
IDR, because there are unique trade-offs to switching out of an IDR plan. For example, borrowers
repaying FFEL loans in IBR would get a lower monthly payment by consolidating into Direct Loans and
entering REPAYE, but any IBR payments they have already made would not count toward the maximum
repayment period in REPAYE. This means they could be repaying their loans for many years longer as the
result of switching out of IBR. 16
Furthermore, many borrowers who are already in PAYE or REPAYE would not be able to further lower
their monthly payments by switching to a different repayment plan. 17 On the other hand, if some
borrowers in IDR are able to afford higher payments and wish to reduce their total interest payments
over time, it may make more sense for them to stay in IDR and make additional payments
(prepayments) within their IDR plan, rather than switching to a non-IDR plan. This is because any unpaid
accrued interest would capitalize upon exiting IDR and these borrowers would not have the full
repayment period in the non-IDR plan.
Nevertheless, it would be helpful to provide borrowers who are already repaying Direct Loans in IBR
with payment estimates for REPAYE. Borrowers in IBR who took out their first loan before July 1, 2014
would have monthly payments that are 15% of discretionary income. If those borrowers switched to
REPAYE, their monthly payments would be lower, at 10% of discretionary income. However, there are
other trade-offs between IBR and REPAYE which could make switching more or less ideal for particular
borrowers, and it may be helpful to communicate those in the Playbooks.
Consumer testing
We appreciate the CFPB’s openness to feedback on the Playbooks and the structured interviews
conducted earlier this year to explore opportunities for improving borrower communications about
repayment options. To build upon that work, we strongly encourage the CFPB to conduct additional
consumer testing of the Playbooks to determine which information is most helpful to include and how
that information should be presented. In addition to general usability and comprehension, it would be
helpful to test the following:
1. Does adding a chart that compares the estimates of monthly payments and the number of
payments remaining help borrowers compare the plans?
16
For more information about this problem, see TICAS. 2015. Comments on Notice of Proposed Rulemaking.
http://ticas.org/sites/default/files/pub_files/ticas_technical_comments_on_nprm.pdf. Pp. 6-7.
17
Note that in some cases, borrowers may have lower monthly payments under an extended 25-year repayment
plan than under IDR.
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2. Do the Playbooks sufficiently communicate the trade-offs of having lower monthly payments
and paying for a longer period of time and paying potentially more interest over time? The
Playbooks include the language, “Keep in mind that switching plans for one with a lower
monthly payment often means paying more over the life of your loan” and provides an estimate
of the number of payments remaining, but does not provide an estimate of total payments in
the different plans. In contrast, ED’s Repayment Estimator does project total payment amounts
and allows borrowers to see more clearly the trade-offs between the different plans.
Specific language suggestions
We recommend making the following clarifications to the language in the Playbooks:
1. Make clear that the count of payments remaining is an estimate. Servicers may send out a
Playbook prior to processing the borrower’s most recent payment, so the count may not be
completely up-to-date. Additionally, in IDR plans, it is impossible to predict exactly how many
payments borrowers have left because many borrowers will end up fully paying back their loans
before the end of 20 or 25 years.
2. Make clear that borrowers can choose from other plans too and that these are not the only
repayment plan options available. This could be communicated by adding “For example” to the
top, above the description of the different plans.
Thank you for this opportunity to comment on the prototype Payback Playbooks. If you have any
questions about our comments, please contact Diane Cheng at [email protected] or Jennifer Wang at
[email protected].
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