Update from the CFPB Student Loan Ombudsman: Transitioning from default to an income-driven repayment plan
Contemporaneous with the publication of the 2016 Annual Report of the CFPB Student Loan Ombudsman, the Bureau sent a letter seeking information from several student loan servicers. This letter requested a range of qualitative and quantitative information about practices for servicing the student loan accounts of economically vulnerable borrowers as they transition from default into an income-driven repayment plan (the “Default-to-IDR transition”).
In response, servicers that collectively handle accounts for approximately half of all student loan borrowers provided information to the Bureau. The following Update provides the public with a preliminary update on the information provided, including a closer look at data related to the performance of certain previously defaulted student loan borrowers. Despite the growing scale of our student loan default problem and the high stakes for borrowers and taxpayers, this new data suggests that this process is failing the borrowers who need it most.