Durbin Statement on the CFPB's Announcement It Will Begin Overseeing Nonbank Student Loan Servicers
[CHICAGO] – U.S. Senator Dick Durbin (D-IL) released the following statement on today’s announcement by the Consumer Financial Protection Bureau (CFPB) that it would begin supervising nonbank student loan servicers with more than one million accounts:
“Today’s announcement by the CFPB ensures that millions more student loan borrowers will enjoy the strong consumer protections that come with the scrutiny of this vital agency. Large loan servicers operating outside the banking system will now be held to higher standards, and consumers can expect more accurate application of payments and more timely resolution of errors on their accounts. At the same time, the CFPB will be better able to evaluate problems like servicer transfer errors which many student loan borrowers face. This is the heightened level of consumer protection I had in mind when I introduced the bill creating an agency that became the CFPB, and I’m glad the agency is continuing to make good on its mission to protect student loan holders and other consumers.”
The CFPB currently oversees student loan servicing at the largest banks. However, more than 40 million Americans with student debt depend on loan servicers, who are often different than the lenders, to serve as the primary point of contact about their loans. Today’s rule expands the CFPB’s supervision to any nonbank student loan servicer that handles more than one million borrower accounts, regardless of whether they service federal or private loans.
Under today’s final rule, which was first proposed in March, the CFPB estimates that it will have authority to supervise the seven largest student loan servicers. Combined, those seven service the loans of more than 49 million borrower accounts, representing most of the activity in the student loan servicing market.