Research

This morning, Assistant Director for Students Rohit Chopra wrote an op-ed that appeared in Politico about the impact of student debt on the economy:

While many in Washington are focused on what loans look like for future borrowers, there may be a domino effect on the broader economy if we ignore borrowers currently stuck with high student loan payments.

Since the Consumer Financial Protection Bureau highlighted a year ago that student debt had surpassed the $1 trillion threshold, others have warned about the impact on the broader economy. Last year, the Treasury Department’s Office of Financial Research described how student debt might impact demand for mortgage credit. The Federal Reserve Board’s open market committee discussed whether student debt is impacting household spending. And just a few weeks ago, the Financial Stability Oversight Council discussion of student debt in its annual report added to the chorus.

In February, we asked the public to tell us about potential policy options to tackle the problem of unmanageable student debt — particularly private student loans, a market that boomed in the years leading to the financial crisis. We received more than 28,000 submissions from experts and individuals. We heard that high student debt levels might impact everything from homeownership to health care.

We’ve cross-posted the piece on our site, as well. Read the whole thing.

We also published a report on student loan affordability that highlights these issues in more detail.

What are you going to make with #CFPBdata?

Last summer, we launched our Consumer Complaint Database featuring data about credit card complaints.

Today, based on feedback from the public, we’re expanding it – and increasing the number of complaints from about 19,000 to more than 90,000. Here’s what we’re adding data about:

• Mortgage complaints submitted since we started taking mortgage complaints on December 1st, 2011.
• Complaints about bank accounts and services submitted since we started taking them on March 1st, 2012.
• Private student loan complaints submitted since we started taking them on March 1st, 2012.
• Complaints about other consumer loans (for example, if you got a loan to finance your daughter’s braces) submitted since we started taking them on March 1st, 2012.
• More specificity about the product each complaint is about, where provided. For example, instead of just “mortgage,” you can see if the complaint is about a reverse mortgage or a conventional fixed mortgage, etc.

And we’re not satisfied quite yet – more expansions are coming. In the future, we’ll add even more products and improvements to the user experience.

The best part is: You don’t have to wait for us to build what you’d like to see from the data. We’re releasing this data as an API, as well as in CSV, JSON, PDF, RDF, RSS, XLS, XLSX, and XML – and we’d love to see what you can do with it.

From infographics to iPhone apps, we’ve seen people do amazing things with the credit card complaint data that was available before today.

If you think you’ve found something interesting in the consumer complaint data, we want to hear about it.

We encourage the public, including consumers, analysts, data scientists, civic hackers, and companies that serve consumers, to analyze, augment, and build on the information in the database to develop ways for consumers to use the complaint data or mash it up with other public data sets to reveal potential trends.

Share your work, from visualizations to new tools, by tweeting @CFPB using the hashtag #CFPBdata.

The Consumer Complaint Database is just another example of our support for an open-data agenda. Our Project Catalyst team also will be using this data to support innovation in the consumer finance space.

Scott Pluta is the Assistant Director for the Office of Consumer Response at the Consumer Financial Protection Bureau.

p.s. As an example of what can be done with the data, we gave one of our staff a day to play with it in Microsoft Excel. Here’s what she came up with. Her example only goes to March 22, and as with the database itself, the data hasn’t been normalized, meaning that in many cases apples-to-apples comparisons can’t always be made. For example, companies with more customers could be expected to have more complaints. States with more people, likewise, would be expected to have more complaints.

Last month, we released a report to Congress with the Department of Education on the private student market. This report helped shed light on how the private student loan market works and where there are opportunities for improvement.

When we design a form or develop a regulation, we work to gather continuous feedback. The same goes for our reports. Since releasing the private student loan report, we’ve been talking to researchers, consumer groups, and industry players to share our results and get feedback. Based on this feedback, we developed ways to make better estimates on certain market statistics, particularly in areas where our data set was incomplete.

While there aren’t any changes to the key findings and recommendations, we released an update today to reflect new methodologies our research team used to calculate some statistics in the report: first, the proportion of private student loan borrowers who exhausted their Federal Stafford Loan options; and second, the extent to which schools certified a borrower’s need for a private student loan.

Compared to the original estimates, the update shows that the number of borrowers who exhausted their federal options is lower than our original estimate, and the level of school certification is higher.

Check out the updates.

Do you have more suggestions about future topics for research on student loans? Share your ideas and tag your story with “student loans.”

The CFPB is building an Office of Research to support its commitment to evidence-based policymaking. The research office will produce new findings that deepen our understanding of the problems that consumers, firms, and markets encounter. It will also help the CFPB conduct rigorous policy evaluations, which in turn will help maximize our effectiveness in addressing these problems and minimize unintended consequences.

Today, the consumer bureau announced that Sendhil Mullainathan will serve as Assistant Director for Research and lead the work of the Office of Research. Mullainathan brings a wealth of relevant experience, including as Professor of Economics at Harvard University. Sendhil has received a MacArthur Foundation “genius award,” as well as numerous other grants and fellowships, including from the National Science Foundation, the Olin Foundation, the Sloan Foundation, and the Russell Sage Foundation.

Under Sendhil’s leadership, the Office of Research will conduct research on a variety of topics and, in many cases, publish findings under the consumer bureau’s name. Frequently, though, researchers will choose their own topics, data, and methodology themselves, draw their own conclusions, and publish in their own names.

Like other federal regulatory agencies, we encourage this kind of “self-directed” research because it promotes evidence-based, rather than myopic or narrow, policymaking. Self-directed research will help us remain true to the core values that underpin our policymaking: honest investigation, independent thinking, and open discussion.

By offering our research staff the opportunity to pursue original ideas, the CFPB will also be in a better position to attract the best-trained researchers with the skills to strengthen our understanding of the benefits and costs of potential policies. Under the CFPB’s research policy:

• Researchers may elect to dedicate a substantial portion of their time to self-directed research. They may focus on household finance or behavior, consumer financial firms or markets, or other areas relevant to the mission of the consumer bureau. Other federal financial regulators also provide researchers time for independent research. For example, the portion of time provided at the CFPB will be comparable to that provided across the Federal Reserve System. Researchers who choose to conduct independent research will be evaluated based on research performance, such as their record of publications.
• Researchers are also encouraged to publish or present their work in peer-reviewed journals and other scholarly venues. The CFPB will not review or censor findings of self-directed research presented externally for policy content, so long as the researcher includes a disclaimer that the work does not necessarily represent the views of the CFPB.

Encouraging original inquiry and independent conclusions will help us act wisely on behalf of the American people. Allowing researchers to publish their findings will increase transparency – and that will help the public to hold us accountable. We are excited to get started.

Raj Date is the Associate Director for Research, Markets, and Regulations.