The Consumer Financial Protection Bureau yesterday published a special edition of its Supervisory Highlights, spotlighting the student loan servicing and collection markets and pointing out some of the issues it has uncovered when examining companies in that market.
A copy of the report can be accessed by clicking here.
Among the issues that the CFPB found during its examinations are:
- Schools having “blanket” policies of withholding transcripts as a means of getting students to make payments on unpaid debts.
- Improperly denying applications for loan cancellations through the Teacher Loan Forgiveness of Public Service Loan Forgiveness programs.
- Making errors when processing applications for income-driven repayment programs.
The report also noted issues when accounts are transferred from one servicer to another. This includes key information — such as the due date for the next payment and the monthly payment amount — not being transferred or being transferred with inaccurate details.
Pressuring borrowers into paying their debts by withholding their transcripts on a blanket basis is an abusive practice under the Consumer Financial Protection Act, the CFPB noted. With respect to the applications for loan cancellations, the CFPB said it will “continue to monitor servicers’ practices to ensure that student loan borrowers are not illegally excluded from relief provided for them under federal law.”
The CFPB said it expects institutions to review the findings in the report and implement the changes necessary to make sure they are not committing any of these types of violations and that any risks “are thoroughly addressed.” Companies should have compliance programs that seek to eliminate the practices described in the CFPB’s Supervisory Highlights reports, the Bureau noted.
