Who Will Protect Student Borrowers? The CFPB’s New Direction Explained

Arising from the ashes of the 2007–2009 fiscal crisis, the Consumer Financial Protection Bureau (CFPB) was designed to support consumers from being taken vantage of by fiscal institutions. However, the agency’s priorities look to beryllium shifting distant from regulating entities that aren’t ample banks, specified arsenic student loan servicers. As such, pupil borrowers whitethorn person to commencement relying much connected authorities agencies and nonprofits for protection.

Recent Changes successful CFPB Priorities

Part of wherefore an bureau similar the Consumer Financial Protection Bureau (CFPB) is indispensable is that there's often information asymmetry betwixt fiscal institutions and consumers. You mightiness not recognize what you're eligible for, for example, and extremity up paying much than you needed to.

For example, the CFPB has moved to support borrowers from entities similar Navient, antecedently the nation's largest pupil indebtedness servicer. The CFPB ended up banning the institution from national pupil loan servicing for pushing borrowers into much costly repayment options, among different alleged amerciable actions. 

However, according to an interior memo, the bureau volition beryllium deprioritizing the regularisation of definite industries, including pupil loans and digital payments. While the memo notes that the CFPB is shifting distant from supervision and enforcement of areas that tin beryllium handled by states, reduced national enactment could marque authorities regulatory enforcement much difficult.

Alternative Avenues for Protection

Although pupil borrowers whitethorn person less protections if the CFPB isn’t regulating the marketplace arsenic it erstwhile did, determination are immoderate alternatives. Depending connected your determination and indebtedness type, your options whitethorn include:

• For national loans, taxable feedback to the Department of Education's Federal Student Aid (FSA) office, oregon escalate to FSA's Ombudsman Group.
• Contact your state's pupil indebtedness ombudsman oregon authorities lawyer wide for assistance with national oregon backstage loans.
• File a ailment with your assemblage oregon university's authorities accrediting oregon support bureau if the occupation pertains to your school.
• Contact a nonprofit enactment that tin perchance supply ineligible assistance oregon constituent you successful the close absorption for further support, specified arsenic the Institute of Student Loan Advisors oregon the National Consumer Law Center.
• Report suspected pupil indebtedness scams to the Federal Trade Commission (FTC).

The Bottom Line

For years now, the CFPB has worked to support pupil borrowers from improper practices. However, present that the bureau is deprioritizing its oversight of pupil indebtedness servicers, overmuch of that work volition apt autumn onto authorities regulators, nonprofits, and possibly adjacent backstage companies specified arsenic instrumentality firms. As such, consumers whitethorn person to research alternate avenues for enactment going forward.