The U.S. Consumer Financial Protection Bureau (CFPB) announced on December 3, 2013, that it has finalized new rules to allow it to "supervise" nonbank servicers of student loans. According to the CFPB, loan servicers are responsible for collecting payments from borrowers. In fact, most student loans are "serviced" by companies that were not the original lenders of these loans. To date, there has been limited oversight of these companies and how they treat their student loan borrowers.
This new authority allows the CFPB to
- supervise companies that handle more than one million borrower accounts, which include the seven largest student loan servicing companies,
- gather reports from and conduct examinations of these servicers,
- enforce federal consumer financial protection laws,
- ensure that banks and nonbanks follow the same rules in the student loan servicing market,
- supervise both federal and private student loans,
- supervise the entire life of a private student loan from origination through servicing to debt collection.
The CFPB took this action after receiving complaints from borrowers about servicer practices, including prepayment stumbling blocks, partial payment snags, and servicing transfer surprises.
For questions related to student loans, contact Neil Snyder, ASHA's director of federal advocacy, at [email protected].