Student Loan Forbearance Steering Audit Register

PROBLEM: A loan servicer that steers struggling borrowers into forbearance instead of income-driven repayment can cost them years of progress and thousands of dollars. On January 13, 2022, thirty-nine state attorneys general announced a settlement of about $1.85 billion with Navient, resolving claims that since 2009 it steered struggling student loan borrowers into costly long-term forbearances instead of counseling them about more affordable income-driven repayment plans, and originated predatory subprime private loans to students at for-profit schools with low graduation rates; the terms included about $1.7 billion in private-loan debt cancellation for about 66,000 borrowers and $95 million in restitution.

SOLUTION: Add a forbearance-steering audit register to IBM Cloud Ideas that records every borrower contact, the repayment options the servicer presented, and the option the borrower chose, then flags any pattern in which borrowers who qualified for income-driven repayment were instead placed in long-term forbearance, with a per-servicer steering score visible to regulators.

EVIDENCE BASIS: DOCUMENTED — 39 state attorneys general, Jan. 13, 2022: ~$1.85B settlement with Navient (steering into long-term forbearance instead of income-driven repayment since 2009; predatory subprime private loans); ~$1.7B debt cancellation for ~66,000 borrowers; $95M restitution. Source: state AG releases, Jan. 13, 2022.