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
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