CFPB, Education Department strike pact to help student borrowers

The Consumer Financial Protection Bureau and the U.S. Department of Education announced a new coordination agreement in order to better serve student loan borrowers. 

The Consumer Financial Protection Bureau and the U.S. Department of Education announced a new coordination agreement in order to better serve student loan borrowers.

Under the newly signed Memorandum of Understanding the agencies will share complaint information from borrowers and meet quarterly to discuss observations about the nature of complaints received, characteristics of borrowers, and available information about resolution of complaints. The MOU also provides for the sharing of complaint data analysis, recommendations, and analytical tools.

“This agreement concerning student loan complaints will protect students as both the Bureau and the Education Department work to resolve their complaints,” said CFPB Director Kathy Kraninger. “This MOU provides a robust framework that allows for the staff at both agencies to work together to provide better outcomes for consumers.”

Both the CFPB and the Education Department have come under fire recently over their handling of student loan issues. A group of Democratic senators rebuked Kraninger in December over the bureau’s handling of student loans, and the CFPB was sued by a consumer group as well.

The Education Department has been criticized over its handling of the Public Service Loan Forgiveness program, a student loan forgiveness program which rejected nearly all applicants. A group of Democractic senators called for a CFPB investigation into one of the servicers handling the PSLF program.

“All student loan borrowers, whether they have a Federally-held or private student loan, deserve world-class service and quick resolution when facing issues,” said U.S. Secretary of Education Betsy DeVos. “Through this new agreement with the CFPB, we will coordinate our regulatory efforts, avoid needless duplication, and protect student loan borrowers.”

Borrowers of both private and federal student loans reported issues “dealing with your lender or servicer” in more than half of all complaints, according to a recent CFPB report.

The MOU also more clearly defines roles and responsibilities for each agency. The MOU also allows for subject matter experts from both agencies to work together more efficiently to resolve complaints and fulfill their respective duties under the law.

Earlier this month, the CFPB filed suit against several companies offering student loan debt relief services for allegedly infractions.

Fredrikson & Byron Law