Betsy DeVos’ Department of Education will cut ties with the Consumer Financial Protection Bureau after nearly six years of the agencies openly sharing information.
The reason? The Education Department thinks the CFPB, which is in the middle of a lawsuit against student loan servicer Navient, has been a bit too eager to go after student loan servicers without involving the department.
“The Department’s mission is to serve students and borrowers, but the CFPB’s actions have undermined that mission,” states a Sept. 1 memo the Education Department sent to Richard Cordray, director of the CFPB.
The CFPB and Education Department made two agreements to share information, one in 2011 and one in 2014. In these agreements, the CFPB said it would send all complaints from student loan borrowers to the Education Department within 10 days so the department could work to resolve the issues.
However, the memo said the CFPB instead chose to resolve issues itself without involving the Education Department.
“It is the Department’s role to work with federal student borrowers to ensure their issues are addressed within the rules applicable to its program,” the memo stated. “The CFPB’s intervention in their area adds confusion to borrowers and servicers who now hear conflicting guidance related to the Title IV student loan services for which the Department is responsible.”
The Education Department did not include examples of what kind of conflicting information the CFPB communicated or how the agency’s actions have made the process more confusing for students or servicers.
It did, however, say the CFPB’s actions are “characteristic of an overreaching and unaccountable agency” and that it used data to “expand its jurisdiction into areas Congress never envisioned” instead of helping the Education Department.
The memo was signed by Kathleen Smith, acting assistant director of the Office of Postsecondary Education, and A. Wayne Johnson, chief operating officer of Federal Student Aid.
The memo arrives two weeks after the CFPB released findings that showed borrowers are taking out student loans at a faster rate and having an even harder time paying them off than before.
The CFPB was created following the 2008 economic crisis. The Obama administration gave the CFPB the power to oversee how financial institutions manage everything from credit cards and mortgages to payday loans. The goal was to make sure that consumers were protected from another crisis.
But a recent report from President Donald Trump’s Treasury Department called for Congress to roll back the CFPB’s “unduly broad regulatory power” which it said has led to “abuses and excesses” that limit consumer choice and access to credit.
In the end, the Education Department made it clear that the department is responsible for managing federal student loan debt, and it doesn’t want the CFPB’s help or oversight to do it.
It’s not clear what this will mean for how the CFPB monitors the $1.4 trillion in student loan debt owed by 44 million borrowers.
Desiree Stennett (@desi_stennett on Twitter) is a staff writer at The Penny Hoarder.
This was originally published on The Penny Hoarder, one of the largest personal finance websites. We help millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. In 2016, Inc. 500 ranked The Penny Hoarder as the No. 1 fastest-growing private media company in the U.S.
source The Penny Hoarder http://ift.tt/2xRYaHD
ليست هناك تعليقات:
إرسال تعليق