InfoBytes Blog

CFPB Releases Annual Report on Student Loan Complaints

On October 14, the CFPB released its annual report of the CFPB Student Loan Ombudsman, which analyzes consumer complaints submitted from October 1, 2014 through September 30, 2015 and provides an examination of issues raised in its September student loan servicing report. The CFPB is predominantly concerned about the group of borrowers facing repayment issues with older federal student loans made by banks and private lenders under the Federal Family Education Loan Program (FFELP). According to the CFPB’s report, at least 30 percent of borrowers who participated in FFELP are either behind in their loan repayments or already in default. The report includes the following additional noteworthy data: (i) more than one in five of borrowers with federal loans made by private lenders are past-due, with more than 10 percent in forbearance; and (ii) 95 percent of borrowers with federal loans made by private lenders are not enrolled in income-driven repayment plans. The content of the report emphasizes the importance of the Department of the Treasury, Department of Education, and the CFPB’s joint statement to improve student loan servicing practices, promote borrower success, and minimize defaults.

CFPB Student Lending Department of Treasury Department of Education

Agencies Unveil Student Loan Servicing Regulatory Framework

On September 29, the CFPB issued a report examining public comments and providing policy recommendations to address issues in the student loan servicing market. The report follows a May 2015 Request for Information notice where the CFPB, together with the Department of Treasury and the Department of Education (collectively, the Agencies), sought feedback on ways to improve student loan servicing practices.

In a parallel announcement, the Agencies released an interagency Joint Statement of Principles on Student Loan Servicing, which is expected to serve as a regulatory framework in the reformation of current student loan servicing practices, and establish minimum federal compliance requirements.

CFPB Student Lending Department of Treasury Department of Education

Department of Education Proposes Rules to Reign In Fees on Student Financial Accounts

The Department of Education is set to propose new regulations which could change how financial institutions provide services on college campuses, according to a NPRM to be published in the Federal Register on May 18. The new rules, part of a nearly 300-page “Program Integrity and Improvement” package, are intended to among other things (i) ensure that students have convenient access on their Title IV funds, (ii) do not incur unreasonable and uncommon financial account fees, and (iii) are not led to believe they must open a particular account from a financial institution to receive Federal student aid. The proposed regulations also update other provisions in the cash management regulations, clarify how previously passed coursework is treated with respect to Title IV funds eligibility, and streamline the requirements for converting clock hours to credit hours. Public comments on the proposed rulemaking will be due 45 days after date of publication in the Federal Register.

UDAAP Debit Cards Department of Education Agency Rule-Making & Guidance