Latest CFPB Effort to Improve Things for Student Loan Borrowers: “Payback Playbook”
Student loan borrowers struggle mightily to get information tailored to our specific circumstances. Ever get a form letter from your student loan servicer that left you scratching your head? Advocates at the Consumer Financial Protection Bureau (CFPB) are working to improve the way loan servicers communicate with us about our loans with the goal of giving consumers real-time, up-to-date information about our repayment options. The CFPB has released new Payback Playbook prototypes (say that six times fast) and they want our feedback.…
Enrollment in Income-Driven Repayment is Up
Nerds like me will want to check out recently released updates to the Department of Education’s Federal Student Aid Data Center for reports including outstanding balances and recipients by loan program, loan type, loan status, repayment plan, and delinquency status. Unemployment and economic hardship deferments are down 31.5 percent from the previous year, as enrollment in income-driven repayment plans has increased. As of December 31, 2015, approximately 4.8 million borrowers are enrolled in Income-Driven Repayment plans.
Comparing Income-Driven Repayment Plans
There are now five different income-driven repayment plans: Income-Contingent Repayment (ICR), Income-Based Repayment (IBR), Pay As You Earn (PAYE), Income-Based Repayment for New Borrowers (New IBR), and now Revised Pay As You Earn (REPAYE). Calculating Monthly Payments Income-driven plans calculate payments as a percentage of “discretionary income”. Discretionary income is defined as the difference between a borrower’s Adjusted Gross Income (AGI) and 150 percent of the poverty guideline for the borrower’s family…
REPAYE application goes live
Borrowers may now enroll in REPAYE using the newly updated electronic Income-Driven Repayment application at studentloans.gov Here’s a preview of the paper application for your viewing enjoyment. The Department of Education’s Repayment Estimator has also been updated to include a REPAYE calculation. And here is the official information about REPAYE and the other Income-Driven Repayment plans posted on studentaid.ed.gov.
How Student Debt Impacts Homeownership
Many thanks to Satinder Haer of Zillow for contributing this post! -Heather Buying a house is the biggest milestone after graduating college for many people. But if you’re facing a mortgage-sized student loan payment each month, homeownership may feel impossible. One common belief is that student loan debt prevents many from saving for a down payment. However, new numbers show student loan debt might not be a major hindrance to homeownership. As long as you obtain a four-year degree or higher, student debt has a minor impact on your…