[Federal Register Volume 76, Number 222 (Thursday, November 17, 2011)]
[Pages 71329-71331]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-29737]



[Docket No. CFPB-2011-0037]

Request for Information Regarding Private Education Loans and 
Private Educational Lenders

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Notice and request for information.


SUMMARY: Section 1077 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act of 2010 (``Dodd-Frank'') requires the Bureau of Consumer 
Financial Protection (``Bureau'' or ``CFPB'') and the Department of 
Education, in consultation with the Department of Justice and the 
Federal Trade Commission, to prepare a Report on Private Education 
Loans and Private Education Lenders. The Bureau seeks information on 
private education loans and related consumer financial products and 
services that are currently being offered to or used by students and 
their families for the financing of postsecondary education.

DATES: Comment Due Date: January 17, 2012.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2011-
0037, by any of the following methods:
     http://www.regulations.gov. Follow the instructions for 
submitting comments.
     Email: CFPB_StudentsFedReg@cfpb.gov.
     Mail: Monica Jackson, Office of the Executive Secretary, 
Consumer Financial Protection Bureau, 1500 Pennsylvania Ave. NW., 
(Attn: 1801 L Street), Washington, DC 20220.
     Hand Delivery/Courier in Lieu of Mail: Monica Jackson, 
Office of the Executive Secretary, Consumer Financial Protection 
Bureau, 1700 G Street NW., Washington, DC 20006.
    Instructions: The CFPB encourages the early submission of comments. 
All submissions must include the document title and docket number. 
Please note the number of the question to which you are responding at 
the top of each response (respondents need not answer each question). 
In general, all comments received will be posted without change to 
http://www.regulations.gov. In addition, comments will be available for 
public inspection and copying at 1700 G Street NW., Washington, DC 
20006, on official business days between the hours of 10 a.m. and 5 
p.m. Eastern Time. You can make an appointment to inspect the documents 
by telephoning (202) 435-7275. All comments, including attachments and 
other supporting materials, will become part of the public record and 
subject to public disclosure. Sensitive personal information such as 
account numbers or Social Security numbers should not be included. 
Comments will not be edited to remove any identifying or contact 

FOR FURTHER INFORMATION CONTACT: For general inquiries, submission 
process questions or any additional information, please call Monica 
Jackson at (202) 435-7275.

SUPPLEMENTARY INFORMATION: In support of the study required under 
section 1077 of Dodd-Frank, the Bureau seeks information on private 
education loans and related consumer financial products and services 
that are currently being offered to or used by students and their 
families for the financing of postsecondary education. As used in 
Section 1077 of Dodd-Frank, ``private education loans'' refers to loans 

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by a school or by a financial institution to finance the cost of post-
secondary education, but excluding loans guaranteed under Title IV of 
the Higher Education Act, commonly referred to as ``federal'' loans.\1\

    \1\ Title IV loans are commonly referred to as ``federal loans'' 
and are often known as ``Stafford Loans,'' Perkins Loans,'' and 
``PLUS and GradPLUS'' loans in the current federal Direct Loan 
program guaranteed under Title IV of the Higher Education Act.

    Section 1077 of Dodd-Frank requires the Bureau and the Department 
of Education, in consultation with the Department of Justice and the 
Federal Trade Commission, to prepare a Report on Private Education 
Loans and Private Education Lenders (``Report'').\2\ Section 1077 
mandates that the Report address a list of questions, some of which may 
best be answered with quantitative data. For those questions, the 
Bureau will initially utilize records already held by the Department of 
Education, information obtained directly from lenders (both for-profit 
and non-profit) and industry associations, and information already 
collected or otherwise available from other public and private sources. 
To supplement these data and to capture qualitative information that 
may help to answer the questions posed by Congress, this notice and 
request for information seeks input from all sources, both inside and 
outside of the financial services industry, including consumers, 
financial services providers, schools, organizations, and other members 
of the public regarding (a) Issues concerning private education loans 
and lending, where existing quantitative data may be incomplete, and 
(b) qualitative issues where public input will add perspective that may 
improve the Report.

    \2\ For the purposes of this request for information, the terms 
``private education loans'' and ``private student loans'' may be 
used interchangeably, as may the terms ``private educational 
lenders'' and ``private student lenders.'' Dodd-Frank defines 
``private education loans'' by reference to section 140 of the 
Truth-in-Lending Act, 15 U.S.C. 1650.

    We refer the public to the questions posed by Congress in Section 
1077 of Dodd-Frank at http://go.usa.gov/XDr. To assist the Bureau in 
responding to those questions, we seek public comment on the questions 
below. The Bureau is particularly interested in learning what 
information would help students make informed decisions about which 
financial services and products are right for them and what approaches 
would best assist recent graduates facing (or about to face) difficulty 
making private education loan payments. The questions are grouped into 
four broad categories, (a) Scope and use of private education loans, 
(b) information and shopping for private education loans, (c) 
institutional loans, and (d) repayment. Please feel free to respond to 
all of the questions or only those that interest you, but please be 
sure to indicate in your comments which questions you are answering.

Scope and Use of Private Education Loans

    1. In addition to private education loans, to what extent do 
students and their families rely on other forms of non-federal debt 
financing to pay for postsecondary education (e.g. tuition payment 
plans, student credit cards, parent or family credit cards, home equity 
lines of credit, etc.)?
    2. For students who do not exhaust their federal loan options, 
including those that require the completion of a Free Application for 
Federal Student Aid (FAFSA), before turning to private education loans, 
what explains their choice of private loans?

Information and Shopping for Private Loans

    3. From what sources do students and their families obtain 
information about private education loans and private lenders? What 
sources are most helpful and accurate?
    a. How effective are the existing disclosures provided by private 
education lenders regarding the terms and conditions of the loans? 
Among other things, comments could address issues such as whether 
students and their families feel they adequately understand the terms 
and conditions of various financial products offered to finance their 
education goals.
    4. What sources of information do students rely upon to gauge the 
appropriate amount of student debt when selecting a school or program? 
Do students rely on financial aid budgets provided by the school or on 
other sources to determine amounts needed to cover tuition and other 
expenses? Do they consider ability to repay in choosing amounts of debt 
to incur? If so, what resources are available to help them determine 
their ability to repay?

Institutional Loans

    5. To what extent are students offered or solicited to take out 
private education loans made directly by the school they are attending? 
How do such programs compare to those offered by non-school private 
educational lenders (e.g., interest rates, ease of approval, 
underwriting criteria, repayment terms etc.)?
    6. What types of schools most commonly offer their own private 
student loan programs? How do schools select the students they deem 
eligible for their loan programs (e.g., academic merit, financial need, 
recruitment, retention)? How are school loan programs funded?


    7. How well are the amount and timing of private education loan 
repayment terms understood (a) When borrowers take out the loan, (b) 
during school, (c) at graduation, and (d) when repayment begins? Among 
other things, comments could address individual experiences at each 
stage of a student's education, or reference existing studies or survey 
work concerning the percentage of students with different levels of 
understanding regarding their debt load at each stage of their 
    8. What are the best practices at school financial aid offices in 
providing students with information about students' future loan 
payments and ability to afford those payments? The Bureau is 
particularly interested in steps or programs schools voluntarily use to 
create or enhance students' awareness of their debt loads and ability 
to afford their loan payments, as well as any evidence concerning the 
impact of such initiatives.
    9. How much does a student's debt load affect undergraduate field 
of study or career choices after graduation? To what extent do 
undergraduates' or recent graduates' debt loads affect their decision 
to attend graduate school or seek advanced professional degrees?
    10. Are students adequately informed of their rights as borrowers 
on private education loans? What resources are students offered to 
protect their rights? Who directs them to resources that may help them 
protect their rights (e.g., friends, schools, lenders, particular Web 
sites, etc.)?
    11. What financial education techniques and resources have 
empirically-demonstrated effectiveness in helping borrowers avoid 
default on private education loans? How prevalent are these techniques 
and resources? Among other things, the CFPB is particularly interested 
to learn:
    a. Which alternative repayment plans have proven most effective in 
keeping borrowers out of default and why?
    b. Whether private lenders adopted repayment program modifications 
to respond to the high unemployment rate among recent graduates in the 
wake of the financial crisis?
    c. Are there techniques that private education lenders should try 
to help reduce default?
    d. Have private lenders developed rehabilitation programs for 
defaulted loans?

[[Page 71331]]

    Dated: November 9, 2011.
Meredith Fuchs,
Chief of Staff, Consumer Financial Protection Bureau.
[FR Doc. 2011-29737 Filed 11-16-11; 8:45 am]