Nonbank Student Loan Servicers Now Subject to CFPB Supervision

Nonbank Student Loan Servicers Now Subject to CFPB Supervision

 On March 14, 2013, the CFPB announced a proposed rule to supervise nonbank student loan servicers.  Under the proposed rule, the CFPB would have supervisory authority for loan servicers with more than one million accounts - a move that would bring the seven largest nonbank student loan servicers within the scope of the CFPB's authority.  Larger banks' student loan servicing operations are already under CFPB supervision.

The announcement of the proposed rule was preceded by a number CFPB reports detailing consumer complaints with nonbank student loan servicers.  The three major concerns highlighted in the reports - borrower confusion about the terms and conditions of their student loans, unresponsive customer service personnel and delays in processing payments - will likely be the focus of the CFPB's supervisory activity.

The CFPB's examination procedures for student loan providers serve as a helpful tool for firms subject to the proposed rule as they prepare for CFPB supervision.

The public has until May 14, 2013, to comment on the proposed rule.  A copy of the proposed rule can be found here.

Read more at Consumer Financial Protection Bureau Report by Troutman Sanders LLP. 

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