On Monday the CFPB released updated examination procedures for student loans. This update revises and expands on a previous update that was released in December 2013 in conjunction with the CFPB’s “larger participants” rule for student loan servicers. The new procedures serve to offer CFPB examiners more detailed guidance for examining student loans servicers subject to the CFPB’s supervisory authority, including banks, private student loan lenders, and others servicers subject to CFPB supervision under the Bureau’s “larger participants” rule.
While these updated procedures introduce a number of changes, the most extensive revisions are found in Module 3, covering student loan servicing. The servicing-related revisions and additions to this module include:
- Expanding the range of sources and materials that examiners should review in the course of an examination of a student loan servicer, specifically mentioning policies and procedures governing the oversight of subcontractors and service providers, loan records on servicers’ systems, copies of written communications provided to borrowers, call recordings, websites and online accounts using test logins, and “any other relevant documentation”;
- Adding separate sections calling for assessment of compliance with FCRA and ECOA adverse action notice requirements, addressing loan payoff and billing statements, and covering cosigned private education loans;
- Introducing an extensive new section titled “Borrower Communications for Federal Loans,” which addresses communications to borrowers regarding the various repayment options available to borrowers with FFELP loans and Direct Loans (i.e. those originated by the Department of Education), as well as a similar section pertinent to servicers of private education loans offering alternative repayment plans or loan modification options;
- Revising and expanding module sections on payment processing, servicing transfers, in-school deferment and repayment, and borrower benefits (such as reductions for ACH payments, graduation bonuses, payment deferment for active duty service members, Teacher Loan Forgiveness, Perkins Loan Cancellation, Defense to Repayment, and Public Service Loan Forgiveness for certain federal student loan borrowers working for qualifying employers).
To help identify the revisions made by the CFPB, we created a blackline copy of the revised procedures that compares the updated procedures to the previous (December 2013) version.