Program Disruptions: Transitioning servicing companies and changing policies have led to borrower confusion. The report highlights how borrowers often struggle to navigate these disruptions, which increases the likelihood of delinquency or default. Student Borrower Outcomes: With repayment resuming after the CARES Act pause, borrowers face renewed challenges. The CFPB noted that many borrowers remain unaware of their repayment responsibilities, which may lead to spikes in delinquency rates if not addressed promptly. How do I prepare? Stay in touch throughout this process. It will be far easier for student borrowers to work through issues they have before the ramp-up period ends, while they have the opportunity to avoid delinquency, default and collections. If borrowers can make payments now, they should as interest is accruing. If they can’t make payments, this is a great time to renew or enroll for an Income Driven Repayment (IDR) plan. These plans can be changed when income changes significantly.
Consider the timing. Knowing where your borrowers are in the borrowing lifecycle is key. Though the CARES Act has many resuming repayment at the same time, also consider where your students are in their Grace Period. Their timing may have been extended or there may be no change at all if they dropped below half time in early April 2023. Offer student borrowers resources. Help prepare your borrowers for the next step with relevant resources and access to experts. Reminders, checklists, timelines, and even some information on general money management can go a long way to empowering students to take the steps they need for repayment success. Use tools from the Student Loan Repayment Toolkit. We are all in this together – patience and empathy will be key. Many times with personal hardship, financial hardship follows so even the simplest of questions might be the first question. An empathetically fresh ear to each borrower’s concerns will help get to the root of the information you need to determine next steps in counseling and recommendations.
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