June 30, 2017 | Consumer Financial Services

CFPB Holds Public Event to Discuss Regulation of Student Loan Servicing and Public Service Student Loan Forgiveness

2 min

The CFPB held a public event on June 22, 2017 in Raleigh, North Carolina, featuring remarks by CFPB Director Richard Cordray and North Carolina Attorney General Josh Stein regarding the Public Student Loan Forgiveness Program (PSLF).  Both Director Cordray and Attorney General Stein spoke about the importance of protecting student loan borrowers, including student loan servicers' obligation to inform borrowers about their repayment options. 

Attorney General Stein emphasized that his office has pursued cases against and will continue to aggressively prosecute loan servicers who violate consumer protection laws, specifically noting his office's efforts to prosecute violations of a North Carolina statute banning the practice of charging upfront fees to offer debt management or consolidation services.  He noted his office's three-pronged approach to protecting student loan borrowers:

  1. Cracking down on fraudulent loan relief groups;
  2. Holding for-profit colleges accountable for the promises they make to students; and
  3. Giving students the information they need to make smart decisions for themselves.

Attorney General Stein urged students and recent graduates to better understand their financial standing, and noted that "[loan] servicers have to play a critical role" in helping student loan borrowers meet PSLF requirements.  Stein encouraged borrowers who encounter issues with loan servicers to file complaints with the CFPB or the AG's office.

Director Cordray announced that a new CFPB report analyzing complaints by borrowers seeking access to PSLF relief addressed challenges that borrowers have faced in accessing loan forgiveness benefits.  Borrowers have complained that loan servicers "are giving them the runaround," such as providing inaccurate or untimely information about borrowers' eligibility for loan forgiveness.  Cordray announced that the Bureau intended to update its exam procedures to ensure that loan servicers comply with PSLF, including that they: 

  • Inform borrowers about what they need to do to qualify for loan forgiveness;
  • Accurately calculate the number of qualifying payments to ensure borrowers "get their full benefits"; and
  • Properly evaluate borrowers' eligibility and progress toward loan forgiveness.
Director Cordray also announced a new informational tool called "Certify Your Service" that can be used by borrowers to understand PSLF requirements.  The tool features various guides that provide step-by-step instructions and general tips on qualifying for PSLF and maintaining eligibility.