Group of professionals discuss finance

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Banking and Finance Law Daily, September 6, 2017

Department of Education ends sharing agreements with CFPB regarding student loans

By Stephanie K. Mann, J.D.

The Department of Education has notified the Consumer Financial Protection Bureau that it intends to terminate the Memoranda of Understanding between the agencies regarding the sharing of information in connection with the oversight of federal student loans. The agreements will terminate on Sept. 30, 2017.

The memoranda include:

  • "Memorandum of Understanding Between the Bureau of Consumer Financial Protection and the U.S. Department of Education Concerning the Sharing of Information (Sharing MOU)" entered into on Oct. 19, 2011; and
  • "Memorandum of Understanding Concerning Supervisory and Oversight Cooperation and Related Information Sharing Between the U.S. Department of Education and the Consumer Financial Protection Bureau (Supervisory MOU)" entered into on Jan. 9, 2014.

According to the letter, the CFPB’s actions have undermined the Department’s mission to serve students and borrowers by failing to share all complaints related to Title IV federal student loans within 10 days of receipt as required by the MOUs. The CFPB’s intervention in working with federal student borrowers "adds confusion to borrowers and servicers who now hear conflicting guidance related to Title IV student loan services for which the Department is responsible," said the letter.

Betrayal of students. In response to the MOU’s letter, Americans for Financial Reform has released a statement that this decision is a "betrayal of students and a boon to loan servicers with a history of preying on those students." The statement added that "Rather than collaborating to get more relief to students who’ve fallen prey to industry scams, and to prevent future abuses, [Department Secretary Betsy] DeVos has chosen to make oversight more difficult and accountability harder to come by," said Alexis Goldstein, AFR’s Senior Policy Analyst. The AFR furthered highlighted the cooperative enforcement actions taken by the Department and CFPB to protect members of the military and all student loan borrowers.

The trade association concluded its statement by questioning the legitimacy of the action. According to AFR, the decision defies Congressional intent as the complaint-sharing MOU was specifically required by Dodd-Frank.

Prioritizing profits. Calling the decision "outrageous and deeply troubling," the National Consumer Law Center claims that DeVos is prioritizing the interests of predatory for-profit schools, debt collectors, and troubled student loan services over the interests of student loan borrowers. The trade association refutes the Department’s claim that the CFPB "unilaterally" expanded its oversight role over servicers and collectors of federal student loans. The Department’s failures in handling loan-related complaint led Congress to give the CFPB authority to help students, argued NCLC.

Companies: Americans for Financial Reform; National Consumer Law Center

MainStory: TopStory BankingFinance CFPB DoddFrankAct EnforcementActions FedTracker Loans TrumpAdministrationNews

Back to Top

Banking and Finance Law Daily

Introducing Wolters Kluwer Banking and Finance Law Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.

A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.