The Consumer Financial Protection Bureau (CFPB) recently asked the public for ideas on how to promote loan affordability for private student loan borrowers, especially in periods of hardship. Woodstock Institute submitted a comment letter synthesizing some of the lessons learned from efforts to promote affordability for struggling mortgage borrowers, such as the Home Affordable Modification Program and settlements with loan servicers. You can read the letter here.


If you’ve followed our coverage of HAMP, you know that HAMP provided much guidance of how not to design a loan modification program. Based on this experience, we told the CFPB that any loan modification or refinance program must ensure that loan modifications are sustainable and affordable in the long term; that effective oversight, enforcement, and transparency mechanisms are in place; that the program can meet the scale of the problem; and that servicing standards are in place to ensure that servicers properly administer the program and communicate with borrowers. We noted that there is currently scant public information about the structure, incentives, and current loss mitigation practices of private student loan servicers and recommended that the CFPB collect and publicize this information.


Although there are many differences between student loans and mortgages, the consequences of unsustainable debt loads are similarly devastating. We hope that the CFPB takes the lessons of the not-so-distant past to heart and designs an effective affordability program for private student loan borrowers who desperately need help.