Later this week, on March 1, the CFPB’s final rule defining larger participants of the student loan servicer market becomes effective.
We expect the CFPB to immediately begin examining entities that qualify as larger participants. Under the rule, the CFPB can supervise servicing of private and federal student loans by any nonbank entity that qualifies as a larger participant, regardless of whether it also offers or provides private student loans. The rule defines as “larger participants” servicers with an “account volume” exceeding 1 million.
We expect servicer exams to soon be followed by exams of service providers to student loan servicers. Because Dodd-Frank allows the CFPB to supervise, regardless of size, service providers to nonbanks it supervises, effective March 1, the CFPB will also be able to supervise all service providers to larger participant nonbank student loan servicers.