CFPB Investigation Probes Violation of Federal Law by Student and University Loan Servicers | Consumer Protection Agency

Washington, DC – Today, the Consumer Financial Protection Bureau (CFPB) issued a special edition of Award of Merit recent studies include student loan servicer practices, and schools that pay directly to students. The tests found that these schools have inappropriate policies of withholding transcripts that encourage students to pay. These findings are available after the CFPB hearing at the beginning of this year, the performance of the colleges operating the loan business will be evaluated. The CFPB’s investigation also found that student loan servicers are hindering the ability of federal borrowers to make loan payments. and cancellation of programs including income repayment, employee loan forgiveness and teacher loan forgiveness. The CFPB ordered the service to work to fix these problems.

“Americans should exercise their right to their educational information to get a job or transfer to school,” said CFPB Director Rohit Chopra. “Our research of lenders found that blanket policies restricting writing can violate the law.”

Stop Writing

Under the Consumer Financial Protection Act, Congress gave the CFPB the authority to oversee institutions that originate private education loans, including institutional loans. The CFPB investigates all private student loans, including the institutions that operate the school’s financial institutions. student loans.

Most home loan lenders use the foreclosure process when a student borrower has debt. The suppression of documents is designed to gain power over the borrowers and force them to pay, because it is difficult to find a job or transfer to another school without an official document. Even if borrowers sign payment agreements with a school, the loan cannot be released until the loan is paid in full.

The CFPB’s investigation found that withholding information to coerce borrowers is an abusive practice under the Consumer Financial Protection Act.

Servicers’ Illegal Interference with Borrower Benefit Programs

The audit also found several cases where federal loan officers denied borrowers’ requests for loan cancellation through Loan Forgiveness. a Teacher or Public Servant Loan Forgiveness. It is illegal for servicers to misrepresent borrower eligibility dates and the amount of payments a borrower needs to make to qualify for relief. The service also gave false information about the right of borrowers to move forward towards loan forgiveness during the suspension of payments. The CFPB ordered the servicers to address the harm to consumers caused by these actions, and will continue to monitor the servicers’ practices to ensure that borrowers are not being illegally subsidized. issued for them under federal law.

Separately, the CFPB reviewed the transfer of millions of borrower records to various services, including nine million loan records that were transferred to July 2021 after student loan servicer PHEAA and Granite State announced they had terminated their contract with the Department of Education. The CFPB has partnered with the Department of Education and several state regulators in overseeing these transfers to identify and address areas of concern.

Read the Supervisory Highlights Student Loan Servicing Special Edition .

Students and their families can get help on how to resolve their student debt through the CFPB’sPaying for Collegeset of tools. For borrowers who have already paid off their student loans, the CFPB hastools and resourcesto help them make important loan decisions. More information is available atconsumerfinance.gov/students.

Having problems related to loan repayment or debt collection can submit a complaint by visiting theCFPB websiteor by phone (855) 411-CFPB (2372).

###

The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps the consumer financial market work by making the rules more effective, by consistently and fairly enforcing those rules. , and by empowering consumers to take more control of their financial lives. For more information, visit www.consumerfinance.gov.

Leave a Comment