Thomas Burke

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On April 19, one day before the release of a highly critical performance audit by the U.S. Government Accountability Office, the Department of Education (ED) announced a series of actions it is taking to “address[] historical failures in the administration of the federal student loan programs.”  The actions are directed at income-driven repayment (IDR) plans, which are used by student borrowers on over half of the more than $1 trillion in outstanding federal student Direct Loans. … Continue Reading

The CFPB has filed a new lawsuit against TransUnion, two of its subsidiaries (TransUnion Interactive, Inc. (TUI) and TransUnion, LLC (TULLC)), and a former TUI executive alleging that the defendants violated the CFPB’s 2017 consent order with the corporate defendants.

The consent order settled the CFPB’s claims that TransUnion had engaged in deceptive marketing of credit-related products. … Continue Reading

The CFPB has entered into a consent order with Edfinancial Services, a student loan servicer, to settle the Bureau’s allegations that Edfinancial engaged in deceptive acts and practices in violation of the CFPA UDAAP prohibition.  The consent order requires Edfinancial to pay a $1 million civil money penalty.

According to the Bureau’s findings set forth in the consent order (which Edfinancial neither admits nor denies), Edfinancial made various misrepresentations to borrowers with Federal Family Education Loan Program (FFELP) loans about their eligibility for Public Service Loan Forgiveness (PSLF). … Continue Reading

The first enforcement action filed by the CFPB under the Biden Administration was a lawsuit filed in a Virginia federal district court jointly with the Attorneys General of Virginia, Massachusetts, and New York against Libre by Nexus, Inc. (Libre).  (Also named as defendants are  Libre’s parent company and three individual owners of the parent company.) … Continue Reading

The CFPB has issued a procedural rule that updates its Rules of Practice for Adjudication Proceedings (Rules of Practice) and a request for comment.  The procedural rule is effective February 22, 2022.  However, the Bureau indicates that it “may make further amendments if it receives comments warranting changes.”  Comments must be submitted by April 8, 2022.… Continue Reading

In CFPB v. National Collegiate Master Student Loan Trust et al., the district court rejected the Trusts’ arguments that they were not “covered persons” under the CFPA and that because the enforcement action was filed by an unconstitutionally structured CFPB, it was void when filed and could not stop the statute of limitations from running. … Continue Reading

The U.S. Court of Appeals for the Third Circuit ruled last week in Commonwealth of Pennsylvania v. Navient Corp. that the PA Attorney General could bring a parallel enforcement action against Navient, a servicer of federal student loans, under the Consumer Financial Protection Act (CFPA) even though the CFPB had previously filed a lawsuit against Navient based on the same alleged conduct. … Continue Reading

The Connecticut federal district court has ruled in Pennsylvania Higher Education Assistance Agency v. Perez that demands by the Connecticut Department of Banking (DOB) to the Pennsylvania Higher Education Assistance Agency (PHEAA) for federal student loan documents are preempted by federal law.  PHEAA was represented by Ballard Spahr.

PHEAA services federal student loans made by the Department of Education (ED) under the Direct Loan Program pursuant to a contract between the ED and PHEAA. … Continue Reading

Earlier this week, Governor Andrew Cuomo again advanced controversial legislation that would establish a state licensing regime for student loan servicers.  The proposal, which is packaged as Part L of the governor’s proposed Transportation, Economic Development and Environmental Conservation Bill for fiscal year 2020, would require companies that service student loans held by New Yorkers to obtain a state license from the New York Department of Financial Services (NYDFS) and submit to onerous reporting and examination requirements. … Continue Reading

On Monday, January 8, 2018, the United States Department of Justice weighed in with a Statement of Interest under 28 U.S.C. § 517 in a pending state-court action (No. 1784CV02682) brought by the Commonwealth of Massachusetts against the Pennsylvania Higher Education Assistance Agency (PHEAA). The Commonwealth alleges that PHEAA violated state and federal consumer protection laws by engaging in unfair and deceptive student loan servicing practices on loans owned or subsidized by the federal government, including with respect to popular programs such as income-driven repayment plans and so-called TEACH grants.  … Continue Reading