The following is a media release by Sen. Elizabeth Warren’s office. Sen. Warren is one of two individuals elected to represent the Commonwealth of Massachusetts in Washington DC. She is a Democrat.
WASINGTON DC – United States Senator Elizabeth Warren (D-Mass.) led her colleagues in sending a letter this week to Consumer Financial Protection Bureau Director Kathy Kraninger requesting further information on the CFPB’s oversight of the student loan industry, and, specifically, the activity of student loan companies and servicers involved in the administration of the federal Public Service Loan Forgiveness Program (PSLF).
Joining Senator Warren on the letter are Senators Sherrod Brown (D-OH), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, U.S. Senate Democratic Whip Dick Durbin (D-Ill.), Kirsten Gillibrand (D-N.Y.), Sheldon Whitehouse (D-R.I.), and Robert Menendez (D-N.J.).
In their letter, the lawmakers cite glaring issues with the federal government’s implementation of the PSLF program, and the actions of private servicing companies paid by the federal government to administer the program.
In June 2017, under Director Cordray, the CFPB responded to PSLFimplementation issues by updating its examination procedures to clarify that its supervision program oversees these companies’ administration of PSLF.
Recent enforcement actions and lawsuits brought by state law enforcement officials—including Massachusetts Attorney General Maura Healey—and by private plaintiffs across the country against these loan servicing companies allege that the companies routinely and flagrantly deceive borrowers who work in public service and are potentially eligible for forgiveness.
These allegations and lawsuits raise numerous questions about the diligence of the oversight provided by the CFPB since Director Cordray’s departure in November 2017, and about whether the CFPB is still following its June 2017 examination procedures regarding the student loan servicers’ administration of PSLF.
Regulating the student loan industry is a core part of the CFPB’s consumer protection mission. Congress created CFPB to serve as an independent federal financial regulator with broad regulatory and supervision responsibilities for bank and nonbank providers of consumer financial products and services.
American consumers collectively owe more than $1.5 trillion in student loan debt, making the student loan market the second-largest market overseen by the Bureau after mortgages. The student loan servicing companies paid to handle consumers’ billing and payment issues are at the center of this market.
“Though one of the primary functions of the CFPB is to regulate the student loan industry, they have failed to adequately address these claims,” the senators wrote. “In particular, we are concerned that CFPB leadership has rolled back its supervision and enforcement activities related to federal student loan servicers. This suggests a shocking disregard for the financial wellbeing of our nation’s public servants, including teachers, first responders, and members of the military.”
The lawmakers ask the CFPB to respond to a series of questions by April 23, 2019, in order to clarify the role that the CFPB has played in overseeing student loan servicers handling of PSLF since December 2017, when former Interim Director Mulvaney assumed control of the Bureau.
Senator Warren has been working to hold the federal government accountable for the administration and oversight of student loans across the board since her 2012 election to the Senate.
When a GAO report revealed a 99.6% denial rate for the PSLF Program, Senator Warren called on the Education Department to make corrections.
In the two-year budget negotiations, Senator Warren successfully advocated for an additional $700 million for the Public Service Loan Forgiveness Program for FY2018 and FY2019.