On October 8, an article published in the Wall Street Journal disclosed that the Consumer Financial Protection Bureau (CFPB) is investigating the student loan servicing practices of a national bank. Sources indicated that the bank, which is the second largest private student-loan originator by volume, has been under investigation since at least late last year. It is unclear what student lending practices are being investigated, but other recent enforcement actions against student lenders provide clues.
On August 24, Enforcement Watch reported that a student loan company had disclosed in an SEC filing that it had received a letter from the CFPB notifying the company that the CFPB was considering recommending legal action against it for “disclosures and assessment of late fees and other matters.”
And, as reported by Enforcement Watch on July 23, the CFPB issued a consent order against the third largest private student-loan originator by volume. The CFPB alleged that the bank overstated the minimum amounts due on billing statements, failed to provide accurate interest information needed by borrowers to seek tax benefits, and engaged in illegal and harassing debt collection activities. A recent article published in LenderLaw Watch notes that in the last eighteen months alone, enforcement agencies have brought over two dozen enforcement actions, investigations and lawsuits against for-profit schools, student lenders, student debt services and student debt relief companies.
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