On June 22, 2017, the CFPB’s Student Loan Ombudsman put out its annual report on student loans, as required by the Dodd-Frank Act. The report analyzes complaints submitted by consumers about student loan servicers between March 2016 and February 2017. Many of the complaints relate to practices, such as payment processing, customer service and borrower communication, and income-based repayment plan enrollment, that the CFPB has frequently scrutinized in the past through supervision and enforcement activities.

However, the majority of the report focuses on complaints from consumers related to the Public Service Loan Forgiveness (PSLF) program, which allows those who enter careers in public service to have their student loans forgiven after a decade. The CFPB’s report criticizes servicers’ alleged failures to actively advise borrowers on how to qualify for PSLF, track their progress toward PSLF completion, and inform them about the requirements of the PSLF program. In conjunction with the report, the CFPB updated its education loan examination procedures to include additional questions about the PSLF program. Continue Reading CFPB Issues Report on Student Loan Servicing and Updated Examination Procedures

The Consumer Financial Protection Bureau (CFPB) marks its fifth birthday having made a substantial mark on the consumer financial services marketplace. To mark this event, we have compiled a retrospective of the CFPB’s first five years. The retrospective provides an overview of the CFPB’s actions in the realms of rulemaking, supervision, and enforcement. While it would be difficult to chronicle all of the CFPB’s activities over that period, the articles in the retrospective provide a snapshot of the rules the CFPB has written or proposed, the supervision program it has implemented, and the enforcement actions it has taken across the landscape of consumer financial services. Some of the articles appeared previously on this blog, others appeared as Mayer Brown Legal Updates, and many are new analyses or summaries of the CFPB’s actions.  Read the retrospective, available here.

 

On May 13, The First Marblehead Corporation became the latest in a series of student loan servicers to disclose possible forthcoming enforcement action by the Consumer Financial Protection Bureau (CFPB). While CFPB investigations are generally non-public, First Marblehead’s disclosure and those of other companies that preceded it suggest that the CFPB’s Office of Enforcement has focused on student loan servicing and collection investigations and now has a pipeline of cases close to resolution.  The series of disclosures suggests that 2016 may see as many as four separate enforcement actions focused on student loan servicing. Continue Reading When Will the Hammer Fall? The Pipeline of CFPB Student Loan Servicing Enforcement Cases is About to Burst

The Consumer Financial Protection Bureau (“CFPB”) took another step in addressing concerns about student loan servicing.  Recently, the CFPB released a set of proposed disclosures, dubbed the “Payback Playbook,” intended to provide borrowers with clear information about their repayment options, particularly if they are facing financial distress.  The CFPB is helping develop the Playbook for use by student loan servicers and is seeking input from the public on how best to convey that information.

The Government Accountability Office concluded last year that many eligible student loan borrowers do not know about, and so do not take advantage of, income- or earnings-based repayment plans for certain types of student loans.  The CFPB, in coordination with the Departments of Education and Treasury, is working to ensure those borrowers have specific information about affordable payments options.  The agencies anticipate that student loan servicers could provide the Playbook notices to borrowers on their monthly bills, in regular email communications, or when logging in to their student loan accounts.

The Playbook’s Features

The CFPB is suggesting that borrowers who are not at risk of default would get a version of the Playbook that describes three personalized repayment options.  Borrowers who have missed a payment or are otherwise identified as being at risk of default would receive a different Playbook that provides a single repayment option and instructions.

Under both aspects of the Playbook, the goal is to describe clearly the borrower’s repayment options, including (i) the number of payments over the life of the loan, (ii) monthly payment amounts, and (iii) whether payments would change over time.  The CFPB also intends that the Playbook would be updated for a borrower when and if the repayment options or his/her circumstances change.

The public may provide comments through June 12, 2016.  The CFPB will share any input it receives with the Department of Education as it develops final disclosures.