The Department of Education recently rolled out the Fresh Start and Fresh Start Plus programs, marking an important regulatory milestone in the history of our industry. It also underscores the critical partnership between government and industry efforts to advance financial equity and inclusion.
Today, 45 million Americans (about 1 in 7) have student loan debt. Most impacted by this are women and black students. According to the latest data, women represent the majority of consumers taking out student loans and black consumers take out higher amounts in comparison to their peers. What’s more, the average cost of college tuition and associated fees rose 169% between 1980 and 2020. The Biden Administration’s initiative aims to provide relief for millions of borrowers struggling with student loans in default and allows borrowers to see positive scoring of payments made on-time and in-full.
The Fresh Start programs are just one example of the many steps being taken today to help consumers achieve and maintain healthy finances, especially for those from communities that have long been marginalized and underserved.
On the industry side, the Consumer Data Industry Association’s members are investing and innovating to further financial inclusion and expand access to credit for the 63 million unbanked or underbanked adults in the U.S. One of the most exciting initiatives today is our industry’s innovation on alternative data.
Incorporating new types of data, such as rental, cell phone and utility payments, expands consumer access to credit and mainstream financial services. This innovation not only has the potential to significantly increase consumer credit scores, but recent studies also show that the expanded use of alternative data could score up to 90% of previously unscorable consumers. With alternative credit data, lenders can also better understand how consumers handle their finances and make more informed lending decisions.
Aside from industry innovations, the three national credit agencies have partnered with organizations across the country that support home ownership and disadvantaged consumers. There are also more resources available today providing information to consumers so that they can better understand how credit works, access their credit report and improve their economic health and wellness.
The three national credit reporting agencies service over 200 million consumers a year and are working diligently to expand access and help all consumers achieve financial security. We understand that it takes both private and public sector commitments and investments to make a true impact, and we look forward to continuing this work alongside government leaders.