Student Lending
Practice Overview
Growing student loan balances, increasing media focus, and mounting political pressure are likely to keep student lending under tight scrutiny for the foreseeable future. Government regulators, private litigants, and consumer advocates are paying close attention to federal and private student lending and servicing practices, as well as on other financial products and services offered to students. Every aspect of the industry will remain subject to critical review, from marketing, disclosures, and loan terms to servicing, repayment restructuring, and loss mitigation. And increasingly, students and schools are looking to alternative financing, including income share agreements and deferred tuition arrangements, that will push the attention of regulators and litigants in new directions.
Buckley offers clients deep insight into the priorities of government enforcement agencies and private litigants, along with comprehensive knowledge of industry best practices and market trends. Our lawyers assist clients in navigating student lending and servicing licensing regimes, as well as drafting and negotiating program, servicing, and loan purchase and sale agreements. We help student lenders and servicers address the complex ways that unfair or deceptive acts or practices and fair lending concerns affect their businesses. We provide clients with ongoing guidance on emerging legal issues, proactive compliance management, and risk assessment to find practical solutions to address legal risk.
We regularly guide companies through investigations and defend clients in enforcement matters before the Consumer Financial Protection Bureau, Department of Justice, prudential banking regulators, state attorneys general, and consumer regulators. We regularly assist lenders, servicers, and service providers in regulatory examinations, supervisory matters, investigations, and enforcement actions.
Examples of our student lending representations include:
- Federal student loan servicing: Advising a major federal student loan servicer in a CFPB enforcement action involving alleged violations of federal consumer financial law in its servicing and debt collection
- Student loan counseling: Representing a company in a CFPB investigation into its student loan counseling and debt collection practices
- Student deposit accounts: Representing a regional bank in a federal enforcement action involving vendor oversight for student deposit accounts
- Fair student lending: Representing a major student lender in responding to its federal prudential banking regulator about its use of predictive school-based attributes in its scoring system
- Student debt collection: Defending a company in a state attorney general investigation of its student loan collection practices
- State student loan servicing law licensing and compliance: Assist consumer lending company in researching state student loan servicing licensing, disclosure, and operational requirements
- Innovative student lending products: Advising a provider of deferred tuition student lending plans in structuring and negotiating program agreements, obtaining necessary licenses, and creating a multistate compliance strategy
- Military-related student loans: Defending a major student loan servicer in the first-ever application of the Servicemembers Civil Relief Act’s interest rate benefit and default judgment provisions to a student loan servicer, addressing novel questions of law and settling all claims without admission of fault
- Program structure and counseling: Guiding several fintech student lenders and servicers in launching new loan programs, revising existing program agreements, negotiating bank partnerships, obtaining state licenses, and navigating changing federal and state guidance for the private student loan industry
Articles
"Servicers and the expanding student loan law landscape" by Kathryn Ryan and Magda Gathani (Law360)
Student debt has long been an area of national concern, predating the Biden administration's efforts to reduce it, and the matter's subsequent landing in the U.S. Supreme Court. As a result of the ensuing scrutiny, student loan servicers are now subject to ever-increasing regulatory and licensing...
Articles"School of hard knocks: Federal student loan servicing and the looming federal student loan crisis" by Jeffrey P. Naimon, Sasha Leonhardt, and Sarah B. Meehan (American University Administrative Law Review)
Nearly forty-three million Americans collectively owe $1.5 trillion in outstanding student loan debt. Of that, approximately ten percent of student loan debt is over ninety days delinquent or in default, while the actual delinquency rate is estimated to likely be double this amount due to the fact...
ArticlesSpecial Alert: CARES Act places significant burdens on servicers of consumer debt but provides some relief to depositories
President Trump late last week signed the Coronavirus Aid, Relief, and Economic Security Act that attempts to soften the negative economic effects of the Covid-19 pandemic on consumers, including by suspending payments for certain student loan borrowers and enabling mortgage loan borrowers to...
Special Alerts"The role of State AGs in solving student loan crisis" by Sasha Leonhardt (Law360)
State attorneys general are the chief legal officers of their state; state attorneys general are the chief law enforcement officers of their state; and state attorneys general must protect their citizens and vigorously enforce their state’s consumer protection statutes. As broad as these powers and...
ArticlesA New Balancing Act: The DOJ Provides New Direction Regarding the SCRA's Interest Rate Benefit
When Congress reenacted the Servicemembers’ Civil Relief Act (“SCRA”) in 2003, Congress designed the SCRA to balance the interests of active duty servicemembers and their creditors, as it had done under the SCRA’s predecessor legislation. One of the benefits provided by the SCRA is a six-percent...
ArticlesSpotlight on Student Lending, Part 2: Lessons Learned from CFPB Reports
In 2012 and 2013, the Consumer Financial Protection Bureau released several major reports and held field hearings focused on private student lending and servicing. In addition to recent CFPB activity, on June 25, 2013, the Senate Banking Committee held a hearing regarding private student loans at...
ArticlesSpotlight on Student Lending, Part 1: Facing Increased Regulatory Scrutiny, Student Loan Lenders Prepare for CFPB Examinations
Currently, total outstanding student debt (both federal loans and private loans) has risen to roughly $1.1 trillion dollars. That figure represents an over 50% increase since 2008 and makes student loans the largest source of unsecured consumer debt – surpassing credit cards. At the same time, at...
Articles
News & Blogs
Maryland amends student financing company registration
On May 8, the Maryland governor signed HB 913 to amend certain provisions relating to student financing company registration and reporting requirements. Among other things, the Act defines the term “student financing company” to mean “an entity engaged in the business of securing, making, or...
InfoBytesFTC obtains TROs to halt student loan debt relief schemes
On May 8, the FTC announced that the U.S. District Court for the Central District of California recently issued temporary restraining orders (TROs) against two student loan debt relief companies that allegedly tricked consumers into paying for nonexistent repayment and loan forgiveness programs...
InfoBytesCFPB: ECOA prohibits discrimination in any aspect of a credit transaction
On April 14, the CFPB filed a statement of interest saying ECOA’s prohibition on discrimination applies “to any aspect of a credit transaction,” and therefore covers every aspect of a borrower’s dealings with a creditor, not just specific loans terms such as the interest rate or fees. The case,...
InfoBytesRepublicans seek to overturn student loan relief program
On March 27, Republican lawmakers Representative Bob Good (R-VA) and Senator Bill Cassidy (R-LA) introduced a joint resolution of disapproval under the Congressional Review Act to overturn the Department of Education’s (DOE) student loan debt relief program, which has yet to take effect. As...
InfoBytesCFPB scrutinizes discharged private student loan billing and collection practices
On March 16, the CFPB released a compliance bulletin discussing student loan servicers’ practice of collecting on private student loans discharged in bankruptcy. The bulletin also notified regulated entities on how the Bureau intends to exercise its enforcement and supervisory authorities on this...
InfoBytesDFPI issues more proposed changes to Student Loan Servicing Act
On March 6, the California Department of Financial Protection and Innovation (DFPI) issued a notice of second modifications to proposed regulations under the Student Loan Servicing Act (Act), which provides for the licensure, regulation, and oversight of student loan servicers by DFPI (covered by...
InfoBytesCFPB report looks at junk fees; official says they remain agency focus
On March 8, the CFPB released a special edition of its Supervisory Highlights focusing on junk fees uncovered in deposit accounts and the auto, mortgage, student, and payday loan servicing markets. The findings in the report cover examinations completed between July 1, 2022 and February 1, 2023...
InfoBytesDFPI settles with student loan debt relief company
On February 28, the California Department of Financial Protection and Innovation (DFPI) announced a settlement with an unlicensed student debt relief company and its owner. The announcement is part of the DFPI’s continued crackdown on student loan debt relief companies found to have violated the...
InfoBytesStates support DOE’s overhaul of IDR plans
On February 13, a coalition of state attorneys general led by California and Massachusetts submitted a letter in support of the Department of Education’s (DOE) proposed changes to income-driven repayment plans (IDR) for federal student loan borrowers. As previously covered by InfoBytes , last month...
InfoBytesBipartisan Senate legislation would offer stronger ISA protections
On January 31, Senators Mark Warner (D-VA), Todd Young (R-IN), Marco Rubio (R-FL), and Chris Coons (D-DE) reintroduced legislation to strengthen protections for students who enter into income share agreements (ISAs). The senators explained that ISAs are an innovative way for students to finance...
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Our Student Lending Team
Partners
Recent Blog Posts
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May 11, 2023
Maryland amends student financing company registration
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May 11, 2023
FTC obtains TROs to halt student loan debt relief schemes
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April 21, 2023
CFPB: ECOA prohibits discrimination in any aspect of a credit transaction
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April 4, 2023
Republicans seek to overturn student loan relief program
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March 17, 2023
CFPB scrutinizes discharged private student loan billing and collection practices