CFPB sued for allegedly failing to supervise student loan servicers
A legal advocacy group has sued the Consumer Financial Protection Bureau and Director Kathy Kraninger for allegedly failing to supervise large student loan servicers that manage the Public Student Loan Forgiveness program.
The advocacy group Democracy Forward filed the lawsuit Monday in the U.S. District Court for the Central District of California Western Division against the Trump administration, including the U.S. Department of Education and Education Secretary Betsy DeVos.
The lawsuit alleges that the CFPB has abandoned its authority under the Dodd-Frank Act to supervise larger participants in the student loan servicing market.
The suit also alleges that the CFPB and Education Department have failed to implement a memorandum of understanding required by the Dodd-Frank Act to coordinate assistance to individual borrowers with private and federal student loans in violation of the Administrative Procedure Act.
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.