February 11, 2020

CFPB and Department of Education Reengage with New Memorandum of Understanding

2 min

The Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Education (ED) have restarted their coordination through a new Memorandum of Understanding (MOU). As part of the new MOU, the two agencies will share complaint information from borrowers and have quarterly meetings to discuss trends and observations relating to borrower complaints, characteristics, and resolutions. The new MOU places the primary handling of consumer complaints regarding federal student loans with the ED.

Resulting from a dispute over which agency should oversee federal student loans, the agencies allowed the prior MOU to terminate on on September 30, 2017. Prior to the termination of the MOU, the CFPB had begun accepting consumer complaints regarding Title IV federal student loans, and, according to ED, had been handling the complaints itself rather than passing them on to ED.

Pursuant to the terms of the current MOU, the CFPB will direct borrowers to contact ED for complaints submitted via the CFPB's website that relate to the origination of loans made, insured, or guaranteed under Title IV of the Higher Education Act of 1965. The CFPB will also forward to ED any complaints submitted through its website and other channels and direct borrowers with such complaints to contact ED. In addition, ED will direct borrowers attempting to submit complaints via ED's website related to private education loans, as defined in the Truth in Lending Act, to contact the CFPB. Similar to the CFPB's requirements, ED will provide complaints submitted to ED through this and other channels.

The MOU further defines roles and responsibilities for each agency. ED takes point on:

  • Complaints regarding Federal loans with program issues (with consultation of the CFPB);
  • Complaints regarding Federal loans with Federal consumer financial law issues (with expertise, analysis, and recommendations from the CFPB).

The CFPB takes point on private loans with Federal consumer financial law issues (with consultation of ED regarding products offered by institutions overseen by ED or on their premises.).

Regarding the new MOU, Secretary of Education Betsy DeVos stated, "Through this new agreement with the CFPB, we will coordinate our regulatory efforts, avoid needless duplication, and protect student loan borrowers." CFPB Director Kathleen L. Kraninger also applauded the MOU and said, "This agreement concerning student loan complaints will protect students as both the Bureau and the Education Department work to resolve their complaints."