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Private education lenders doing business in Illinois now have access to official informational guides and templates for meeting the November 1, 2022, reporting requirements under the state’s new Know Before You Owe Private Education Loan Act (“KBYO”). 

Promoted as a means to make borrowers aware of federal student loan options before they turn to private loans, KBYO also seeks to collect and publicize data on private educational lending through an annual reporting obligation imposed on lenders. … Continue Reading

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

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. 
… Continue Reading

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

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 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

With the return to repayment of federal student loans on February 1, 2022 quickly approaching, the Department of Education’s Office of Federal Student Aid (FSA) recently notified the private collection agencies (PCAs) under contract with FSA to collect Direct Loans that it would begin the process of recalling approximately 5.1 million borrower accounts and winding down the PCAs’ contracts. … Continue Reading

The CFPB Education Loan Ombudsman has issued his annual report covering the period  from September 1, 2020 through August 31, 2021.

The report includes an analysis of the approximately 5,300 complaints related to private or federal student loans that the Bureau received during that period.  While complaints overall during this period trended lower, the decrease was most pronounced for federal student loan complaints which decreased approximately 32% compared to the prior year.… Continue Reading

We look at the practices found to be unlawful by CFPB examiners.  In addition to “as low as” rate advertising by providers of private student loans that did not disclose rates were dependent on borrower creditworthiness, we discuss servicer practices involving: providing inaccurate information about eligibility for the Public Service Loan Forgiveness program, automatic placement in a natural disaster forbearance, failing to waive or refund overcharges imposed after servicing transfers of loans owed by borrowers enrolled in income-based repayment plans, and failing to honor borrowers’ standing instructions on payment allocation.… Continue Reading

After reviewing the existing types of federal student loans and forgiveness programs, we discuss the current political debate over forgiveness, including the Education Dept.’s upcoming analysis of the President’s forgiveness authority and other analyses of such authority, potential legal sources of such authority, and how courts might respond to challenges to any Presidential action to forgive federal student loans.… Continue Reading