The Consumer Financial Protection Bureau proposed a ruleThursday that would expand its powers to federally supervise certain non-bank student loan servicers that serviceboth federal and private student loans.

“The student loan market has grown rapidly in the last decade,and servicers are now facing the stress of an increasing number ofdelinquent borrowers,” said CFPB Director Richard Cordray.

“Our rule would bring new oversight to the student loan marketand help ensure that tens of millions of borrowers are not treatedunfairly by their servicers,” Cordray said in the announcement.

The CFPB currently oversees student loan servicing at largerbanks. Under the proposed rule, any non-bank student loan servicerthat handles more than 1 million borrower accounts would be subjectto CFPB supervisory authority. With that threshold, the bureauestimates that it would have authority to supervise the sevenlargest student loan servicers.

Combined, those seven service the loans of 49 million borroweraccounts, representing most of the activity in the student loanservicing market.

The proposed rule comes after borrowers provided feedback to theCFPB, saying they have experienced confusion regarding outstandingbalances and fees and poor service. Bringing all student loanservicers under CFPB supervision would allow the regulator toevaluate the extent and scope of these issues through examination,the bureau said.

The public will have 60 days to comment on the proposed ruleafter it is published in the Federal Register.

A factsheet on the student loan servicing proposed rule isavailable on the CFPB's website.