The Bureau of Consumer Financial Protection has announced that it is moving its student lending division to the agency’s division that focuses on consumer education and engagement, which is being seen as yet another sign of how acting director Mick Mulvaney is de-emphasizing enforcement and supervision at the regulator.
The move was announced in a memo circulated to all CFPB employees yesterday.
The student loan division had been responsible for returning about $750 million back to students following investigations, settlements, and consent orders against student loan originators and servicers. The division had been in the middle of a lawsuit against Navient, the nation’s largest student loan servicing company. What will become of that lawsuit remains to be seen.
A spokesman for the CFPB said the move was a “modest org chart change.”
Consumer advocates disagreed with the CFPB’s characterization of the move.
“Shuttering the CFPB’s student lending office is an appalling step in a longer march toward the elimination of meaningful American consumer protection law,” said Christopher Peterson, financial services director at the Consumer Federation of America, according to a published report. “This actively promotes greater profits for a handful of debt collection businesses at the expense of mistakes, neglect and confusion for millions of student loan borrowers.”
Even some within the CFPB itself said the move was a calculated one by Mulvaney, since he left other divisions within the agency, such as one that focuses on protecting the rights of servicemembers, untouched.
Mulvaney’s reorganization comes at the same time that the CFPB has removed student loan servicing from the agency’s list of rule-making interests.
