On June 27, the Oregon Department of Consumer and Business Services’ (“Department”) Division of Financial Regulation (“Division”) finalized new regulations implementing Senate Bill 485, which requires companies to obtain a license from the Division in order to service student loans in Oregon, unless an exemption applies. The new regulations also establish related servicer requirements and prohibited acts, the supervisory authority of the Director of the Department (“Director”), and the obligations of a student loan ombudsman appointed or designated by the Department pursuant to Senate Bill 485. … Continue Reading
Louisiana enacts new requirements for student loans
On June 18, 2022, Louisiana’s Governor signed into law two new bills that impose new requirements for student loans. Both bills are effective on August 1, 2022.
HB 610. HB 610 creates the following new duties for student loan servicers:
- Response to Inquiries/Complaints. A student loan servicer must acknowledge receipt of a written inquiry or complaint from a student loan borrower or the authorized representative of a student loan borrower within 10 days after receiving the inquiry or complaint.
This week’s podcast episode: An update on the debate over federal student loan forgiveness
We discuss the Biden Administration’s recent change in tone on forgiveness, alternative approaches to full forgiveness the President might take, potential legal sources of the President’s authority to take such actions, including the status of the Education Dept.’s analysis of the President’s forgiveness authority, and likely timetable for Presidential action. We also look at the Administration’s recent initiatives involving income driven repayment plans and public service student loan forgiveness and explore the perspective of interests opposed to forgiveness.… Continue Reading
CFPB Spring 2022 Supervisory Highlights looks at auto servicing, credit reporting, credit card account management, debt collection, deposits, mortgage origination, prepaid accounts, remittance transfers, and student loan servicing
The CFPB has released the Spring 2022 edition of its Supervisory Highlights. The report discusses the Bureau’s examinations in the areas of auto servicing, consumer reporting, credit card account management, debt collection, deposits, mortgage origination, prepaid accounts, remittance transfers, and student loan servicing that were completed between July 2021 and December 2021. … Continue Reading
Department of Education announces major revisions to IDR payment counting
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
CFPB criticizes transcript withholding by postsecondary schools
A recent CFPB blog post endorsed part of U.S. Department of Education Secretary Cardona’s keynote address for the 2021 FSA Training Conference that issued a call to end the longstanding institutional practice of transcript withholding in order to promote equity and diversity. While the CFPB rings alarm bells in its blog post, it offers no data concerning the prevalence of this practice to explain why it finds cause for alarm.… Continue Reading
CFPB blog post and report focus on student loan servicing
Student loan servicing was the focus of recent CFPB attention in the form of a blog post, “Busting myths about bankruptcy and private student loans,” and a report (labeled a “special issue brief”) titled “Student Loan Borrowers Potentially At-Risk when Payment Suspension Ends.” Both items raise areas of compliance risk for student loan servicers.… Continue Reading
Kentucky enacts licensing requirement for servicers of private and federal student loans
Kentucky recently enacted HB 494, titled the “Student Education Loan Servicing, Licensing, and Protection Act of 2022,” which will require student loan servicers to be licensed in Kentucky. The Act applies to servicers of private student loans and federal student loans.
Servicers of private student loans must submit a licensing application to the Commissioner of the Kentucky Department of Financial Institutions that includes certain specified information, including the name of at least one managing officer who has a minimum of at least two years’ experience in the student education loan servicing industry. … Continue Reading
CFPB enters into consent order with student loan servicer to settle alleged UDAAP violations in connection with FFELP loans
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
CFPB to begin examining post-secondary schools that loan directly to students
The CFPB has announced that it will begin examining post-secondary schools, such as for-profit colleges, that extend private loans directly to students and/or parents to fund undergraduate, graduate, and other forms of postsecondary education. The announcement was accompanied by the CFPB’s issuance of an update to its Education Loan Examination Procedures manual. … Continue Reading