CFPB, Education Dept. sign MOU on student loan complaints
The Consumer Financial Protection Bureau and the Department of Education announced they will begin exchange student loan complaint data after their information-sharing efforts had been in limbo for over two years.
CFPB Director Kathy Kraninger on Monday said that the two agencies had signed a memorandum of understanding to begin sharing complaint data analysis, other information and recommendations.
Complaints from student loan borrowers have not been shared by the two agencies since December 2017, when Education Secretary Betsy DeVos instructed student loan servicers not to submit data or documents directly to agencies other than her department regarding investigations or oversight.
“This MOU provides a robust framework that allows for the staff at both agencies to work together to provide better outcomes for consumers,” Kraninger said in a press release. “This agreement concerning student loan complaints will protect students as both the Bureau and the Education Department work to resolve their complaints.”
The agreement states that the CFPB must give the Education Department at least 60 days notice before the information sharing process can begin.
“Through this new agreement with the CFPB, we will coordinate our regulatory efforts, avoid needless duplication, and protect student loan borrowers,” DeVos said in a press release. “All student loan borrowers, whether they have a Federally-held or private student loan, deserve world-class service and quick resolution when facing issues.”
Under the agreement, the CFPB will direct borrowers who submit complaints about federal student loans to the Education Department, while the department will direct complaints related to private loans governed by the Truth in Lending Act to the CFPB.
More than 81% of the $1.6 trillion in outstanding student loan debt is held by the federal government but managed by private-sector student loan servicers.
The six-page document, however, does not resolve issues related to federal student loans.
Lawmakers grilled Kraninger last year about enforcement of the federal Public Service Loan Forgiveness Program, a 2007 program created under the George W. Bush administration that encouraged students to enter nursing, policing, teaching and other nonprofit careers and have their loans forgiven after 120 monthly payments. Recent data from the Education Department shows that 99% of applications for the program have been denied.
The announcement of the agreement came ahead of Kraninger's testifying Thursday before the House Financial Services Committee.
Last year, a legal advocacy group sued the CFPB and Kraninger for allegedly failing to supervise large student loan servicers that manage the student loan forgiveness program.
The Dodd-Frank Act requires the CFPB’s ombudsman to enter into a memorandum of understanding with the Education Department to share complaints.
Richard Hunt, CEO of the Consumer Bankers Association, called the agreement "a positive step" toward helping all student loan borrowers.
“Sharing this information will ensure a better, more meaningful view of the entire student loan universe, 90% of which is originated by the federal government," Hunt said.