Lawmakers seek info from CFPB on unlawful student loan practices

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Lawmakers are seeking information from the Consumer Financial Protection Bureau (CFPB) on its efforts to protect consumers from unlawful student loan servicing practices.

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Financial Services Committee Chair Rep. Maxine Waters (D-CA), Education and Labor Committee Chair Rep. Bobby Scott (D-VA), and Oversight and Reform Committee Chair Rep. Elijah Cummings (D-MD) expressed concerns that the CFPB has taken actions that weaken its ability to protect student loan borrowers.

In a letter to CFPB Director Kathleen Kraninger, the chairs wrote that they are worried that student loan borrowers are getting potentially harmful and conflicting advice.

They cited former Student Loan Ombudsman Seth Frotman, who asserted in his resignation letter in August 2018 that CFPB leadership “has abandoned the very consumers it is tasked by Congress with protecting.” The position of Student Loan Ombudsman has been vacant since Frotman resigned.

The chairs are requesting the necessary records from the CFPB by Sept. 9.

They also sent a letter to Education Secretary Betsy DeVos expressing concern over the Education Department’s failure to protect consumers from student loan companies. The letter addresses recent reports that the department is shielding student loan servicing companies from state law enforcement and undermining the CFPB’s oversight of these companies.

“As chairs of committees with oversight responsibilities over the student loan industry, we are very concerned by reports that under your leadership, the Department of Education has failed to adequately oversee student loan servicers,” they wrote. “Reports indicate that improper practices by these servicers—including inaccurate determination of monthly payments, forbearance steering, and other practices—directly impact millions of Americans and have ripple effects on their families, communities, and the economy as a whole.”

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