Coming Soon: The Payback Playbook

Michael Lux Blog, News, Student Loans 0 Comments

The Consumer Financial Protection Bureau is creating a new form that all borrowers will get with their monthly student loan statements.  This new form, called the “Payback Playbook”, is aimed at better informing federal student loan borrowers about the different repayment plans available.

Right now, the CFPB is still working out what details will be available on the Payback Playbook.  Presently, they are accepting comments based upon two proposed designs for the playbook.  Comments to the CFPB can be made here.  People interested in leaving a comment have until June 12 to be heard.

What can borrowers expect?

The Payback Playbook won’t offer much in the way of repayment advice or strategy.  However, it should provide a snapshot of the different repayment plans available.  Given that many people are not aware of the income based repayment plans available, this could be a huge assist to the borrowers with the least understanding of the student loan repayment options.

What Won’t the Playbook Do?

Some major media outlets are mistakenly reporting that borrowers will be getting lower payments.  Headlines like, “Many student loans are about to get more affordable” miss the point.  Student debt will not be any more affordable.  There isn’t a new payment plan and interest rates are not changing.  The only thing that will be different is that borrowers will hopefully have a little more information when they get letters from their loan servicers.

Where things get interesting…

They key feature to the Payback Playbook is information about what payments would be on an Income Driven Payment Plan.  For many borrowers this is the switch that saves them money.

What isn’t clear is where the CFPB and/or the loan servicer will be getting the income information.  As things stand right now, borrowers have to either submit their most recent tax return or two recent paychecks for income verification.  Does this mean that the Department of Education or the loan servicers will be accessing tax returns through the IRS before receiving borrower permission?  This would be a huge difference from the current system.

There is also the question of how fast this could all be done.  Anyone who has ever applied for an income driven repayment plan knows the process can take months.  If the process takes months when they only do the math for people who ask, how long will it take when they do the math for every single borrower?

Bottom Line

The Payback Playbook is a nice little upgrade to the standard information all borrowers receive with their student loans.  How the Playbook is implemented will be a process worth watching closely.