- CFPB’s Proposed Rule Regarding Non-Bank Student Loan Servicers
- May 20, 2013 | Author: Joseph M. McCandlish
- Law Firm: Weltman, Weinberg & Reis Co., L.P.A. - Columbus Office
On March 14, 2013, the Consumer Financial Protection Bureau (CFPB) proposed a rule that will allow it to supervise certain student loan servicers. “Under the rule, any non-bank student loan servicer that handles more than one million borrower accounts will be subject to CFPB supervisory authority. With that threshold, the Bureau estimates that it would have authority to supervise the seven largest student loan servicers.” Those seven servicers handle most of the activity in the student loan servicing market. http://www.consumerfinance.gov/pressreleases/consumer-financial-protection-bureau-proposes-rule-to-oversee-nonbank-student-loan-servicers/.
Both federal and private student loans will be covered. As to federal loans, according to the CFPB’s press release, the Bureau would continue to work closely with the U.S. Department of Education.
As to private student loans, the Bureau cited several reasons for proposing this rule. They included: confusion among borrowers as to exactly how much is owed; borrowers dealing with servicers that were unaware of what resources were available to the borrowers, and which transferred the borrowers calls from person to person; lost paperwork and delayed payments; and others.
CFPB Director, Richard Cordray, commented that the “rule would bring new oversight to the student loan market and help ensure that tens of millions of borrowers are not treated unfairly by their servicers.” He also commented about the recent rapid growth in the student loan market.
The public has sixty days to comment on the proposed rule, from the date it was published in the Federal Register. The deadline for comments is May 28, 2013. To comment, go to https://www.federalregister.gov/articles/2013/03/28/2013-06291/defining-larger-participants-of-the-student-loan-servicing-market and click on “Submit a Formal Comment” near the top-right of the screen. This citation also takes you to a website that will provide more information about the proposed rule.