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Financial Services Law Insights and Observations

Democratic Senators question Kraninger on student loan servicer oversight

Federal Issues U.S. Senate CFPB Department of Education Student Lending Student Loan Servicer

Federal Issues

On December 17, eight Senate Democrats wrote to CFPB Director Kathy Kraninger urging the Bureau to fulfill its statutory obligations related to the oversight of student loan servicers who collect loans guaranteed by the federal government. In the letter, the Senators express concern over what they consider the Bureau’s “unacceptable” abandonment of its supervision and enforcement activities related to federal student loan servicers, and discuss the Department of Education’s termination of two Memoranda of Understanding (MOUs) in 2017 that previously permitted the sharing of information in connection with the oversight of federal student loans. (Previously covered by InfoBytes here.) According to the Senators, Kraninger’s testimony before the Senate Banking Committee in October (covered by InfoBytes here) reaffirmed the Bureau’s responsibility and ability to examine entities engaged in federal and private student loans. In addition, the Senators claim that Kraninger testified that the Bureau and the Department were “discussing how to move forward in an effective way” to ensure they were overseeing student loan servicers. However, the Senators note that “nearly two months later, the Bureau and Department still have not reestablished MOUs, and the Bureau still has not resumed examinations of federal student loan servicers.” In addition to calling on Kraninger to “take immediate steps, including seeking a court order” requiring the Department to provide access to borrower information so the Bureau can resume examinations of student loan servicers, the Senators request information concerning the MOUs as well as a timeline from the Bureau on when it will resume its examinations.

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