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 Loans
Kentucky enacts licensing requirement for servicers of private and federal student loans
By Lisa Lanham & Aileen Ng on
Posted in State Licensing, 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…
Dept. of Education issues new interpretation on preemption of state laws regulating student loan servicers
By John L. Culhane, Jr. & Heather S. Klein on
The U.S. Department of Education has issued a new interpretation “to revise and clarify its position on the legality of State laws and regulations that govern various aspects of the servicing of Federal student loans.” The new interpretation revokes and supersedes the ED’s 2018 preemption determination. It was not unexpected, as the ED has…
Education Department names Richard Cordray Chief Operating Officer of Federal Student Aid
By John L. Culhane, Jr. & Heather S. Klein on
Posted in Dept. of Education, Student Loans
The Department of Education has announced that it has selected former CFPB Director Richard Cordray as the Chief Operating Officer of Federal Student Aid. In addition to having served as CFPB Director, Mr. Cordray formerly served as Ohio Attorney General.
Rohit Chopra, President Biden’s nominee for CFPB Director, previously served as the CFPB’s Private Education…
Illinois publishes proposed student loan servicing rules
By Heather S. Klein on
The Illinois Department of Financial and Professional Regulation (IDFPR) published a notice of proposed rules implementing the Student Loan Servicing Act in the July 10, 2020 issue of the Illinois Register. Written comments will be accepted for 45 days.
The IDFPR initially proposed rules in November 2018 but withdrew them a year later because it…
CARES Act includes provisions on credit reporting and student loans
By John L. Culhane, Jr. & Kim Phan on
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) includes the following provisions of particular interest to members of the consumer financial services industry:
Credit Reporting. Section 4021 (Credit Protection During COVID-2019) amends the Fair Credit Reporting Act to impose new COVID-19 related reporting requirements on furnishers of information to consumer reporting agencies. Under…
CFPB and Dept. of Education enter into new MOU on handling complaints; Director Kraninger tells lawmakers negotiations are underway for second MOU on supervision
By John L. Culhane, Jr. on
Last Monday, the CFPB announced that it had entered into a new Memorandum of Understanding with the Department of Education to replace the MOU that was terminated by the ED effective October 1, 2017. The new MOU, which is effective as of January 31, 2020, is limited to the handling of student loan complaints. The…
Congressional Chairs Concerned About State of Student Loan Industry Seek Answers from CFPB, Department of Education and Student Loan Servicers
By Andrew Carobus on
Last week, Congressional representatives Maxine Waters, D-CA, Bobby Scott, D-VA, and Elijah Cummings, D-MD, as chairs of committees with oversight responsibility for the student loan servicing market, sent letters to CFPB Director Kathleen Kraninger and Department of Education Secretary Betsy DeVos about their concerns with the current state of the student loan industry. The letters…
Maine Enacts Student Loan Servicing Law
By Ballard CFS Group on
We can add Maine to the list of states to have enacted a “Student Loan Bill of Rights” that requires student loan servicers to be licensed. On June 20th, Maine Governor Janet Mills signed into law LD 995, “An Act To Establish a Student Loan Bill of Rights To License and Regulate Student Loan…
Colorado Enacts Student Loan Servicer Licensing Law and Maryland Expands Regulation of Servicers
By Ballard CFS Group on
Posted in Regulatory and Enforcement, Student Loans
Colorado and Maryland have each enacted legislation regulating student loan servicers. On May 13, Colorado Governor Jared Polis (D) signed into law SB 19-002, and that same day, Maryland Governor Larry Hogan (R) signed HB 594.
The Colorado law, SB19-002, is the more sweeping of the two, establishing a licensing requirement for student…