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
"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
CFPB settles with student-loan debt relief company
On June 9, the CFPB filed a stipulated final judgment and order in the U.S. District Court for the Southern District of California resolving allegations that the operator of a student-loan debt relief company engaged in unfair debiting of consumer accounts, in violation of the CFPA. According to...
InfoBytesEd. Dept. discharges additional $5 billion
On June 1, the Department of Education announced the “largest single loan discharge the Department has made in history,” which includes discharging all remaining federal student loans borrowed to attend any campus owned or operated by a specific large for-profit post-secondary education company...
InfoBytesDistrict Court issues judgment against student debt relief operation
On May 24, the U.S. District Court for the Central District of California entered a stipulated final judgment and order against an individual defendant who participated in a deceptive debt-relief enterprise operation. As previously covered by InfoBytes , in 2019, the CFPB, along with the Minnesota...
InfoBytesNew York enacts new consumer protection measures
Recently, the New York governor signed legislation regarding consumer protections and student transcripts. The first piece of legislation, S.1684 / A.8293 directs NYDFS to conduct a study of underbanked communities and households in the state and to make recommendations on improving access to...
InfoBytesCFPB exposes private loan servicers’ unfair practices
On May 5, the CFPB discussed examination findings related to private student loan servicers’ alleged failure to follow through with promised loan offers or modifications. The Bureau directed servicers found to have breached their commitments to make “significant remediation amounts” for failing to...
InfoBytesEd. Dept. discharges additional $238 million
On April 28, the Department of Education announced it will deliver relief to tens of thousands of borrowers harmed by “pervasive and widespread misconduct” at a beauty school. According to the Department, the students attended the beauty school between 2009 and 2016, during which it “engaged in...
InfoBytesNew York AG settles with student loan servicer for alleged PSLF and IDR failures
On April 27, the New York attorney general announced a settlement with a national student loan servicer, resolving allegations that it failed to properly manage student loans and administer the Public Service Loan Forgiveness (PSLF) program by inaccurately counting loan payments, improperly denying...
InfoBytesEducation Dept. rolls out new plan for IDRs
On April 19, the Department of Education announced additional changes to the federal student loan program designed to reduce or eliminate federal student loan debt for many borrowers. In particular: To address long-term forbearance steering, Federal Student Aid (FSA) will conduct “a one-time...
InfoBytesSenators warn CFPB of student loan servicers’ mismanagement of IDR programs
On April 14, Senators Sherrod Brown (D-OH), Elizabeth Warren (D-MA), and Richard J. Durbin (D-IL) sent a letter to CFPB Director Rohit Chopra urging the Bureau to investigate recent reports of student loan servicers mismanaging income-driven repayment (IDR) programs. The letter alleged that...
InfoBytesCFPB questions transcript withholding as a debt collection practice
On April 18, the CFPB announced it is examining the practice of transcript withholding as a debt collection practice. According to a Bureau blog post, many post-secondary institutions choose to withhold official transcripts from borrowers as an attempt to collect education-related debts ranging...
InfoBytes
Our Student Lending Team
Partners
Recent Blog Posts
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June 14, 2022
CFPB settles with student-loan debt relief company
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June 3, 2022
Ed. Dept. discharges additional $5 billion
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May 27, 2022
District Court issues judgment against student debt relief operation
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May 12, 2022
New York enacts new consumer protection measures
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May 12, 2022
CFPB exposes private loan servicers’ unfair practices