Acting Director Mick Mulvaney sent his staff at the Consumer Financial Protection Bureau a housekeeping email Wednesday morning, announcing that the bureau would combine its student-focused office with its financial education department.
But consumer advocates heard a death knell for enforcement efforts that have returned $750 million to student loan borrowers.
“Mick Mulvaney wants to shut down the only federal office fully focused on protecting student borrowers from predatory student loan companies,” Sen. Elizabeth Warren, D-Mass., who helped start the CFPB, said in an email statement to NerdWallet. “Between Mulvaney’s and Betsy DeVos’ anti-student actions, the Trump administration has declared war on America’s students.”
The bureau insists it’s business as usual.
“This is a very modest organizational chart change to keep the Bureau in line with the statute but the office is still operating within the same division,” John Czwartacki, the bureau’s chief communications officer and spokesperson, said in an email statement to NerdWallet. “The work of the office continues, personnel are all on the job and working on the same material as they were before. The bottom line is there is no functional or even practical change.”
But moving staff into the financial education office raised alarm bells for some.
“Education can only go so far when a company is actually being predatory,” says Whitney Barkley-Denney, senior policy counsel at the Center for Responsible Lending, a nonprofit advocacy group.
Any change in the CFPB’s role is a big deal, not just to activists, but to the 44 million Americans who owe a collective $1.5 trillion on their educations. Here’s what’s on the line if the CFPB scales back student loan enforcement, and how to get help elsewhere if you need it. (Disclosure: NerdWallet CEO Tim Chen is a member of the CFPB Consumer Advisory Board.)
How the CFPB defends student borrowers
The CFPB has handled student loan borrower complaints since 2012. They’re monitored by the bureau’s Student Loan Ombudsman and are included in the bureau’s publicly available Consumer Complaint Database. In one year alone — September 2016 to August 2017 — the bureau received more than 20,000 complaints from student loan borrowers.
Complaints have led to greater CFPB scrutiny of lending and servicing practices, leading the bureau to take multiple legal actions on behalf of borrowers. Those include orders for a multimillion-dollar penalty and redress payments against private lenders Citibank in 2017 and Wells Fargo in 2016 for their servicing practices. It also helped secure $480 million in loan forgiveness for borrowers who took predatory loans from the shuttered for-profit chain Corinthian Colleges.
The CFPB is in the midst of a lawsuit against the student loan servicing giant, Navient. The servicer is accused of misallocating payments, misguiding payments and providing unclear information about income-driven repayment plan options.
The bureau hasn’t said it will end the lawsuit under its announced internal changes, but consumer advocates fear that it will.
“If the CFPB drops the case, I think that signals it’s open season on student loan borrowers,” says Persis Yu, an attorney with the National Consumer Law Center.
Other ways to get student loan help
Borrowers who feel they have been misled by their student loan servicers, or whose payments have been misapplied, can contact these resources:
- State attorneys general offices: Several attorneys general, including those in Illinois, Pennsylvania and Washington, have made student loan protection one of their signature issues. Find your attorney general’s office and submit a complaint to its consumer complaint division.
- State consumer protection offices: You can also submit a complaint directly to your state’s office of consumer protection, which handles concerns about financial products. Some offices are affiliated with the state attorney general, while others are stand-alone bureaus.
- Federal Trade Commission: Register a complaint with the FTC’s Complaint Assistant online service to report an issue with your loan servicer, lender, school, scholarship or grant. The FTC doesn’t resolve specific complaints but does share them with law enforcement partners and provides information on next steps.
- Department of Education’s Federal Student Aid Feedback System: Submit a complaint or report a scam to the Federal Student Aid office using its feedback system. Provide your FSA ID to track your case history.
- Department of Education’s Federal Student Aid Ombudsman Group: If you already tried to resolve a dispute with your federal loan servicer and didn’t get relief, you can contact the FSA Ombudsman Group. This method should be a last resort. Call 1-877-557-2575 for the fastest response.
- Certified student loan counselors: Find a student loan counselor certified by the nonprofit National Foundation for Credit Counseling. They can offer advice on next steps to take if you’re having difficulty dealing with your lender or servicer.
- VA GI Bill Feedback System: Veterans having difficulty with GI Bill funds and student loans can file complaints using the Veterans Affairs GI Bill Feedback System.
- NerdWallet’s Student Loan Watch List: If you think you may have been the victim of a student loan scam, check if it’s on NerdWallet’s Student Loan Watch List. Report your experience by emailing email@example.com.
Filing a complaint or seeking advice from any of these outlets offers no guarantee your issue will be resolved in your favor, if at all. But it’s still worth a shot and will help enforcement agencies stay abreast of predatory activities.
You can share your point of view on the CFPB’s work, and how you’d be affected by potential changes to it, by contacting your congressional representatives.