Thursday, November 21, 2013

Independent Study Shows Unintended Consequences of TCPA

An independent study conducted by a well-respected Washington economist demonstrates the unintended harm done to student loan borrowers by outdated Federal Communications Commission (FCC) rules governing the Telephone Consumer Protection Act (TCPA).  Specifically, the TCPA rules that prohibit the use of predictive dialer technology to contact borrowers on their cellular telephones without the borrower’s express consent is resulting in unnecessary and avoidable student loan defaults.  Moreover, defaulted borrowers languish in default due to unnecessary barriers that hamper communications.  The study, which can be found here, provides the best evidence yet that borrowers are being harmed by rules governing the TCPA that are grossly outdated and no longer adequately recognize the current trends in cell phone usage and wireless households.  The study also supports NCHER’s long-held position that reasonable improvements to the TCPA, along with important consumer protections, would significantly improve default prevention and the ability of collectors to help borrowers rehabilitate their defaulted loans.

Key findings of the study include:

• Nearly 20 million borrowers will fail to receive critically needed services over the next decade if the Department of Education, guaranty agencies, loan servicers, and their contractors are unable to use available technology to communicate with borrowers.

• Based on industry experience, the use of predictive dialing technology increases contact success rates by 151 percent. The Department of Education states that if their servicers and collectors can talk to a borrower, they can almost always resolve the delinquency or default using the tools Congress provides to help student loan borrowers.

• The use of borrower-friendly income-based repayment programs would increase significantly if technology can be used to reach more borrowers.

• Nearly 59 percent of delinquent student loan borrowers are 39 years of age or younger. An estimated 76 percent of these individuals have cell phones and more than 50% rely solely on their wireless devises.

• Assuming the current rate of growth for cell phone usage, over the next ten years nearly 12 million student loan borrowers will avoid the painful consequences of default if their loan services are able to contact them using predictive dialing technology.

• Modification of the TCPA will help remove nearly 7.9 million borrowers from default status over the next ten years.

• Under the reasonable assumption that the percentage of borrowers relying on cell phones for communication will continue to increase, an additional 1.7 million borrowers will languish in default if the TCPA is not changed. This represents the opportunity cost of inaction.

NCHER encourages all of its members to assist in this initiative to make reasonable improvements to the TCPA.  Contacting your Congressional delegates would be tremendously helpful.  A two-page NCHER position paper regarding the study is available for your use and can be found in the full version of today’s Briefing.  Please contact Tim Fitzgibbon ( or Sean Deverey ( if you are willing to pursue this issue with your Members of Congress. 

General News 

•  Chairman Hensarling's Statement on Bringing Accountability and Transparency to the CFPB.

•  An article from Inside Higher Ed on higher education associations concerns about college rating plan.

•  An article from The Chronicle of Higher Education titled "College-Completion Rates Remain at Last Year's Pace."

•  The New York Times reports "For Those in Their 20s, a Finding That They Don't Manage Debt Well."

•  A piece from The Chronicle of Higher Education  on support services and veteran higher education success.

Member News

•  MEFA's art Competition Celebrates 10 Years of Encouraging Dreams and College Savings. 

•  Student Lender SoFi Plans First Securitization.

•  National Student Clearinghouse Research Center releases preview of report on college completion rates.

• Iowa College Aid Announces Launch of its Blog, Education Empowers.

Walter Pryor

Vice President, Government Relations

1701 W. Golf Road, Tower II

Rolling Meadows, IL 60008