Developments in Federal Student-Lending Law: Harbingers of Change?

"5 These trends are forcing federal regulators to respond to the complex and troubled studentlending market that includes federal, state, and institutional loan programs, along with private student loans.6 Although several federal agencies regulate student loans,7 this summary of recent developments focuses on the Consumer Financial Protection Bureau ("CFPB") and the U.S. Department of Education ("DOE"). CFPB Actions The CFPB has supervisory jurisdiction over providers of private education loans.8 Additionally, in 2014, the CFPB finalized a larger participant rule for the student-lending market that extended its supervisory authority to nonbank federal and private student loan services with an account volume exceeding one million.9 The CFPB also has the authority "to designate a Private Education Loan Ombudsman" to assist consumers of private student loans and to prepare an annual report detailing complaints and other issues related to student lending.10 The CFPB's recent supervision and enforcement actions in the studentlending space are discussed below. "14 The CFPB's student-lending focus also includes potential violations of the Fair Credit Reporting Act ("FCRA")13 and Regulation V.16 Under Regulation V, determining the reasonableness of a student loan servicer's policies and procedures for furnishing accurate and reliable information to credit reporting agencies "depends on the nature, size, complexity, and scope of the entity's furnishing activities. The Supervisory Highlights include the following examples of practices considered unfair and/or deceptive: using "auto-default" clauses, many of which are ambiguous about the consequences for the consumer if a co-signer files for bankruptcy or dies;23 failing to inform a consumer about the...