Student loan debt has been rising for many years by nearly all measures
– including total loan debt balance and average debt amount at graduation.
Student loan debt is the second largest debt in the U.S. exceeding aggregate
debt from auto loans, credit cards, and home-equity debt balances.
Numerous players and institutions hold stakes at each level of the market,
including federal and state governments, colleges and universities, financial
institutions, students and their families, and numerous servicers and
guarantee facilities. As part of these efforts, the Departments of Education
and Treasury in Partnership with the Consumer Financial Protection Bureau
(CFPB) have undertaken initiatives in an attempt to improve servicing
In September 2015, the Departments of Education and Treasury along with
the CFPB issued a
Joint Statement of Principles on Student Loan Servicing. This statement laid the groundwork for future initiatives to strengthen
servicing protections for borrowers and set forth the objective to ensure
student loan servicing is, where appropriate:
- Accurate and Actionable
- Accountable; and
Credit Reporting Impacts
While the objectives described above apply across many aspects of student
loan servicing, one in particular stands out – credit reporting.
To initiate these efforts, the agencies (Dept. of Education, Dept. of
Treasury and CFPB) announced a joint effort in April 2016 and published
a fact sheet outlining how they intended to “modernize” and standardize
student loan credit reporting processes. While the fact sheet primarily
focuses upon Direct Federal Loans and Federal Guaranteed Loans, the eventual
guidance to be published as a result of these efforts will likely apply
to all student loans (public and private).
As a financial services consulting firm that spends a significant amount
of time in the credit bureau compliance and CFPB compliance exam preparation
space, we anticipate this guidance will have a substantial impact on the
student loan servicing industry. To help get ahead of these changes, we
have conducted research and published the white paper, "Modernizing" Student Loan Credit Reporting: Insights into the Anticipated
Guidance and Recommendations for Proactive Action.
While the guidance is not finalized, the insights in the white paper highlight
situations where we expect the new guidance to have an impact –
including specific fields that may be effected, which include but are
not limited to:
- Special Comment Code
- Account Status Code
- Account Type
- Amount Past Due
- Credit Limit
- Current Balance
Download the full white paper to read more on the anticipated guidance related
to student loan credit bureau reporting and to understand what steps you
can take now to ensure compliance readiness.