Student Lending

Looking Ahead to 2026

Following a slowdown in federal oversight of the student lending environment in 2025, the compliance landscape has become quieter and more fragmented for lenders and servicers. Looking forward, we anticipate states will adopt more student loan licensing and servicing laws to fill the void left by the lack of uniform federal oversight and state and private borrower litigation will become more prevalent.

Key Trends From 2025

Major Consumer Financial Protection Bureau (CFPB) and U.S. Department of Education (DOE) staff reductions, combined with a deregulatory federal posture, have impacted the student lending sector in 2025. The CFPB did not initiate any enforcement actions against student loan servicers this year, and its 2025 rulemaking agendas did not highlight any new student loan–specific rules.

The DOE also significantly shrunk its footprint in federal student lending. In November 2025, the DOE announced six new agreements with the U.S. Department of Labor, U.S. Department of the Interior, U.S. Department of Health and Human Services, and U.S. Department of State to support the Trump administration’s stated goal to “break up the federal education bureaucracy.” This stands in contrast to years of substantial federal oversight of student lending through both the CFPB and the DOE. In response to this retreat, state regulators and state attorneys general ramped up student loan regulation and enforcement.

In 2025, the student lending market also witnessed a shift from public to private financing channels, driven largely by policy volatility and tightening federal borrowing. As repayment resumed for millions of federal borrowers and uncertainty grew concerning long-term forgiveness and income-driven repayment programs, demand for private student loan refinancing increased. At the same time, student loan delinquency skyrocketed. The share of borrowers who are more than 90 days delinquent on student loans nearly doubled between February 2020 and February 2025. On the supply side, private lenders, fintech platforms, and investors accelerated their involvement in the student loan market as federal lending caps and eligibility reforms signaled the possibility of a larger private credit footprint. Lenders also continued to experiment with alternative and artificial intelligence–driven underwriting models, prompting heightened state regulatory interest in fairness testing and documentation.

In the News

In 2025, federal activity in the student loan space was concentrated on administering existing student loan programs while reworking repayment options, rather than developing new conduct-based regulatory frameworks or enforcement initiatives regarding student loan servicing or lender conduct. The DOE focused on implementing changes required by the One Big Beautiful Bill Act such as adjusting loan forgiveness processes and implementing new repayment options. For example, the DOE’s new “rulemaking will eliminate the Grad PLUS program, […] cap Parent PLUS loans, sunset […] student loan repayment plans” from prior presidential administrations, “and create a new […] Repayment Assistance Plan.” 

At the same time, states advanced their own policy frameworks:

• Many states, including Colorado and Connecticut, and the District of Columbia continued to require the registration or licensing of student loan servicers, enabling state regulators to oversee servicer conduct and enforce borrower protection requirements.
• The California Department of Financial Protection and Innovation reaffirmed and enforced its licensing regime under the California Student Loan Servicing Act, emphasizing compliance with recordkeeping, payment processing, and borrower protection obligations. 
• Lawmakers in states such as New Jersey moved forward with bills aimed at increasing regulatory oversight of student lenders and servicers, including proposals to require lender registration and impose substantive conduct requirements, such as clear disclosures to borrowers to ensure they are equipped with all available information. The New Jersey bill remains pending as of this publication.
• States such as New Mexico, New York, and North Carolina considered borrower bill of rights legislation, which would create new enforcement standards and potential liability for student loan market participants. New York’s proposed bill of rights, for example, aims to “protect borrowers and ensure that student loan servicers act more as loan counselors than debt collectors.” New York’s bill has been referred to committee review, North Carolina’s remains pending, and New Mexico’s bill has been postponed indefinitely.

Together, these actions reinforced a trend of decentralized oversight.

2025 Enforcement Highlights

CFPB Enforcement Action Dismissed After Settlement 

In January 2025, the Biden-era CFPB entered into a proposed stipulated judgment with the National Collegiate Student Loan Trust (NCSLT), resolving long-running allegations that the NCSLT had, for years, filed debt collection lawsuits against borrowers without the documentation needed to prove ownership or the validity of the debts. The case, originally filed in 2017, was emblematic of systemic documentation issues in older private loan securitizations. After the change in administration, however, the CFPB declined to enforce the proposed settlement and, in April 2025, voluntarily dismissed the lawsuit altogether, effectively ending one of the CFPB’s oldest enforcement files.

Massachusetts AG Settlement — AI and Student Lending

In July 2025, Massachusetts Attorney General (AG) Andrea Joy Campbell announced a $2.5 million settlement with a Delaware-based provider of education-financing products, resolving allegations that the company’s lending practices violated state consumer protection and fair lending laws. According to the AG’s office, the company relied on artificial intelligence (AI) underwriting models that were insufficiently tested for discriminatory outcomes and posed a risk of disparate harm to minority borrowers. The settlement also addressed the company’s use of automated eligibility rules — including a “knockout” criterion tied to immigration status — that allegedly resulted in disproportionate denials for Black and Hispanic applicants. Under the agreement, the company committed to significant changes to its underwriting, model governance, and compliance practices to better ensure fair and lawful lending going forward. 

Given the reduction in federal enforcement coupled with the rise in AI-based lending, Goodwin anticipates additional oversight from state enforcement arms in 2026.

* * *

Read the next chapter, “Auto Loan Origination and Servicing.”

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.