Democrats Press DeVos to Renew Cooperation With CFPB
Calling the CFPB a crucial watchdog of student loan servicers, some 39 congressional Democrats are pressing Education Secretary Betsy DeVos to again share servicer information with the consumer agency.
“Contrary to the department’s assertion, Congress has not exempted companies that service or collect on federal student loans from any consumer financial protection law,” the Democrats, including ranking members of banking and education committees, wrote.
Several weeks ago, the Education Department sent a letter to CFPB Director Richard Cordray stating that it no longer would share servicer information with the agency. Education officials contended the agency had unilaterally expanded its powers over servicers. The letter stated the Education Department has sole authority over the student loan programs.
The letter represents another shot at the CFPB by the Trump Administration, which has called for the agency’s powers to be greatly decreased. The House has also passed Financial Servicers Chairman Jeb Hensarling’s (R-Texas) Financial CHOICE Act, which would curtail the agency’s powers.
The CFPB said since it began accepting complaints about student loan servicers in February 2016, the agency has received nearly 20,000 complaints.
In their letter, the Democrats said while the Education Department has the authority to administer the federal student loan programs, the authority is not exclusive and has “intentionally constrained by law due to the department’s historical negligence in carrying out many of its oversight responsibilities over federal student loan servicers.”
Democrats have also accused DeVos of rolling back efforts to assist students having trouble with the loan programs.
For his part, Cordray sent a letter last week to DeVos stating the Higher Education Act does not supersede consumer protection laws. He said Dodd-Frank directed the CFPB’s student loan ombudsman to enter into a memorandum of understanding with the Education Department.
“Indeed, prior to last week’s letter, the department has never expressed any concerns about the MOU or the handling of student loan servicers,” he wrote.
He added, “For years, our agencies have worked collaboratively and the bureau has never knowingly taken any actions in conflict with the department’s regulations or instructions to servicers.”