CFPB will supervise large nonbank student lenders
Dec. 4, 2013 – CFPB Director Richard Cordray announced on Tuesday the bureau would define its scope of supervision over nonbank student loan servicers to include all servicers handling more than one million accounts, in a final rule.
NAFCU Regulatory Affairs Counsel PJ Hoffman responded, “The final rule includes no new supervision requirements for credit unions, as NAFCU has advocated. This rule will help reign in the bad actors that were previously unregulated. This will create a more level playing field for credit unions, which continue to provide the gold standard for member service and student loan servicing.”
The CFPB has been collecting complaints about student loans since it proposed the rule in March. The rule in intended to specify what the bureau’s Dodd-Frank Act mandate to supervise “larger participants” in the student loan market will entail.
Cordray said, “We have heard complaints from private student loan borrowers that their servicer is not held accountable for answering their questions and providing quality customer service. Borrowers have complained that they had trouble making prepayments or partial payments on their loans.” He said the threshold of one million borrower accounts would “cover the seven largest student loan servicers, who service the loans of tens of millions of borrower accounts.”
In October, a CFPB report detailing student loan complaints showed that 87 percent of complaints were directed at eight companies, none of which are credit unions.