WASHINGTON — The Consumer Financial Protection Bureau released a guide Monday to how its examiners will review any private student lender to ensure compliance with applicable consumer financial laws.
Lenders will be reviewed on issues including accuracy of advertising, product disclosures, collections, borrower qualifications and the process for handling complaints or inquiries.
"For many borrowers, a student loan may be their first major financial decision," CFPB Director Richard Cordray said in a press release. "With student debt topping a trillion dollars, we will be working to ensure consumers are treated fairly and lenders are held accountable."
At least $8 billion of private student loans are in default, roughly 5% of the $150 billion market, according to an annual report released in October by the CFPB's student loan ombudsman.
The Student Lending Examination Procedures is a part of the CFPB's General Supervision and Examination Manual. The procedures will be used in examining both banks and non-banks that offer student loans and in coordination with the agency's enforcement team.
In addition, the CFPB is also working on web-based tools to help consumers shop for student loans, financial aid and repayment options. The tools are a direct result of complaints lodged by consumers with the CFPB. The agency received 2,900 complaints related to student loans between March, when it first started receiving such complaints, and October, when the ombudsman report was issued. Sallie Mae received the highest percentage of complaints at 46%, next to American Education Services with 12% and CitiBank at 8%.