WASHINGTON – Today, U.S. Senators Tom Udall (D-N.M.) , Elizabeth Warren (D-Mass.) , and Sherrod Brown (D-Ohio) introduced legislation to protect student borrowers and guarantee oversight of the lending industry. The CFPB Student Loan Integrity & Transparency Act of 2019 ensures the transparency and effectiveness of the Consumer Financial Protection Bureau’s (CFPB) Student Loan Education Ombudsman, the federal government’s top official tasked with serving as an internal advocate for students who are struggling to repay federal education loans. The bill would require the CFPB and the Department of Education to share information, require loan servicers to cooperate with the Ombudsman, and fully staff the Ombudsman’s office.
The Trump administration weakened the independence and effectiveness of the Student Loan Education Ombudsman when CFPB Acting Director Mick Mulvaney closed the Office of Students and Younger Consumers (OSYC)— the only federal office solely dedicated to protecting student loan borrowers. This action raises serious questions about the CFPB’s willingness to pursue enforcement actions that would protect student borrowers from predatory loan servicers and lenders.
“We owe it to students in New Mexico and across the country to protect them from lenders who do not always act in the best interest of borrowers. Without a functioning Student Loan Ombudsman office, we simply don’t have the tools we need to stop loan servicers from taking advantage of borrowers or acting unlawfully—and student borrowers get hurt,” said Udall. “This administration is failing borrowers by prioritizing corporate interests over the rights of students. New Mexico has the second highest student loan default rate in the country, with 16.2 percent of graduates defaulting on their loan repayments. This legislation takes steps to ensure that New Mexico borrowers receive student loan assistance when they most need it.”
“The Trump Administration has done everything they can to muzzle the nation’s top student loan watchdog at the consumer protection agency, and student borrowers have literally paid the price—it’s time to fight back. That’s why I’m glad to work with Senator Udall on The CFPB Student Loan Integrity & Transparency Act, which will ensure that the student loan watchdog has the tools it needs to protect student borrowers from greedy student loan companies trying to cheat them,” said Warren.
“The financial lending industry already has enough powerful allies in Washington, students and families need a strong, independent ombudsman looking out for their interests and protecting them from shady lending practices,”
said Brown.
"Senator Udall's legislation makes it clear that protecting student loan borrowers must be a top priority for the Consumer Bureau,"
said Seth Frotman, Executive Director of the Student Borrower Protection Center and the former CFPB Student Loan Ombudsman
. "The Trump Administration has turned its back on student loan borrowers and this important bill will put borrowers' voices back at the center of the Bureau's consumer protection work."
According to a recent U.S. Department of Education Inspector General report , the agency’s lack of enforcement leads to, “increased interest or repayment costs incurred by borrowers, the missed opportunity for more borrowers to take advantage of certain repayment programs, negative effects on borrowers’ credit ratings, and an increased likelihood of delinquency or even default.”
The Student Loan Education Ombudsman was created when Brown introduced the Private Education Loan Ombudsman Act in 2009 to help streamline assistance to Americans struggling with private student loan issues and then later pushed for its inclusion in the Dodd Frank Act. Specifically, the Ombudsman is tasked with providing assistance to borrowers of education loans by:
- Receiving, reviewing, and attempting to resolve complaints from loan borrowers,
- Creating a Memorandum of Understanding (MOU) with the Department of Education Student Loan Ombudsman to facilitate cooperation in addressing student loan complaints,
- Compiling and analyzing data regarding borrower complaints, and
- Submitting annual student loan reports to relevant House and Senate Committees.
Key provisions of the CFPB Student Loan Integrity & Transparency Act of 2019 include:
- Information sharing between CFPB and DoED to allow the CFPB Ombudsman to remain informed with the most up-to-date student loan data as they undertake the functions of the position.
- Requiring loan servicers to work with the CFPB and prohibit the DoED from entering into a student loan service agreement unless the servicer agrees to directly provide student loan information to the CFPB Student Loan Education Ombudsman when it requests it.
- Requiring the CFPB Director to maintain adequate staffing levels and resources within the act so that the Ombudsman may carry out the functions and duties of the office.
In addition to Senators Udall and Warren, the legislation is cosponsored by Senators Richard Blumenthal (D-Conn.), Christopher Van Hollen (D-Md.), Brian Schatz (D-Hawaii), Kamala D. Harris (D-Calif.), Amy Klobuchar (D-Minn.), Bob Menendez (D-N.J.), and Tammy Duckworth (D-Il.).
A summary of the CFPB Student Loan Integrity & Transparency Act of 2019 can be found HERE . Text of the legislation can be found HERE .
