CFPB Addresses Potential Risks Student Borrowers Face When Payment Suspension Ends


On April 14, the CFPB Office of Research released a special report addressing the risks facing student borrowers once federal Covid-19 payment suspensions end later this year. The report documented the status of millions of student borrowers during the pandemic and found that the most at-risk borrowers are those between the ages of 30 and 49 who live in low-income and high-minority census tracts.

The report looked at data from its consumer credit panel (a sample of nearly 34 million student borrowers, including those with private loans and loans that had not yet gone into repayment as of February 2020 ) to identify types of borrowers who may find it difficult to return to the planned program. loan repayments once the suspension of payment is over. The analysis identified five potential risk factors: (i) pre-pandemic defaults on student loans; (ii) pre-pandemic payment assistance on student loans; (iii) several student loan servicers; (iv) defaults on other credit products since the start of the pandemic; and (v) new third party collections during the pandemic. The researchers found that more than five million borrowers had at least two of the five potential risk factors considered in the report, and that borrowers with multiple risk factors were more likely to live in low-income census tracts. income or high minority. For example, the report found that about 17% of student borrowers in the sample had multiple loan managers before the pandemic. While having multiple service providers does not necessarily lead to greater repayment difficulties, the report notes that some of these borrowers might face “an increased risk of confusion or payment difficulties when coordinating communication and payments with multiple entities,” and cites previous findings indicating that some student loan servicers are refusing or not approving qualified borrowers for income-driven repayment plans. The researchers also concluded that there are other borrowers outside the scope of the report who may not have difficulty immediately after the payment suspension ends, but may experience difficulty later.


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