On April 14, the Consumer Financial Protection Bureau (CFPB or Bureau) published a report titled Student Loan Borrowers Potentially At-Risk when Payment Suspension Ends. The publication uses data from the CFPB’s Consumer Credit Panel to identify which types of borrowers may struggle to make their scheduled loan payments based on five potential risk factors:

  1. Pre-pandemic delinquencies on student loans
  2. Pre-pandemic payment assistance on student loans
  3. Multiple student loan servicers
  4. Delinquencies on other credit products since the start of the pandemic
  5. New third-party collections during the pandemic

The CFPB finds that about 15 million borrowers have at least one of the potential risk factors considered in this report, and over 5 million have at least two.

On April 6, President Joe Biden announced an extension of the federal student loan pause through August 31. In his statement, Biden suggested that if these loan payments were to resume on schedule in May, analysis of recent data from the Federal Reserve indicated that millions of student loan borrowers would face significant economic hardship, and delinquencies and defaults could threaten Americans’ financial stability.

Much like the Bureau’s recent activity around medical debt, this report seems to signal a wider and more aggressive conversation the CFPB is having with consumers and financial institutions about student loan debt. In a blog post on April 14, the CFPB referenced the Biden administration’s student loan extension, noting three things that borrowers and lenders should keep in mind: borrowers are at risk of struggling when payments return; borrowers could face bills for unnecessarily high amounts; and millions of borrowers are also navigating servicing transfers. Two days earlier, on April 12, the Bureau published another blog post “busting myths” about bankruptcy and private student loans, stating explicitly that education loans “can” – emphasis in the original – be discharged in bankruptcy.

The picture here is of an administration and a regulatory agency deeply concerned with the economic well-being of American consumers, and willing to take much bolder action than previous administrations. How these actions will interact with the complex American economic system, however, is not as clear.