U.S. Department of Education Ends MOUs with CFPB
9/6/2017 6:17:00 PM
The DOE says the CFPB’s treatment of data on federal student loans is “characteristic of an overreaching and unaccountable agency.”
The U.S. Department of Education (DOE) has terminated two Memoranda of Understanding (MOUs) with the Consumer Financial Protection Bureau related to federal student loan oversight and sharing of information, citing that the bureau has “violated the intent” of those agreements.
In the two MOUs, dated Oct. 19, 2011 and Jan. 9, 2014, the DOE and CFPB agreed “to collaborate to ensure coordinating in providing assistance to and serving borrowers seeking to resolve complaints related to their private education or federal student loans,” and to “cooperate in connection with their respective student financial services oversight and supervisory activities,” according to the letter sent to the CFPB from Kathleen Smith, the DOE’s acting assistant secretary in the Office of Post Secondary Education, and A. Wayne Johnson, chief operating officer in Federal Student Aid.
“The department’s mission is to serve students and borrowers, but the CFPB’s actions have undermined that mission by violating the intent of the MOUs,” the strongly-worded letter dated Aug. 31 states.
The letter specifically calls out the CFPB for failing to direct complaints related to Title IV federal student loans to the DOE within 10 days of receipt and instead handling the complaints internally.
“It is the department’s role to work with federal student borrowers to ensure that their issues are addressed within the rules applicable to its program. The CFPB’s intervention in this 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,” it states.
The letter concludes by stating, “The Department takes exception to the CFPB unilaterally expanding its oversight role to include the Department’s contracted federal student loan servicers. The Department has full oversight responsibility for federal student loans.”
U.S. Rep. Virginia Foxx, R-N.C., chairman of the House Committee on Education and the Workforce, praised the DOE’s decision to end the MOUs with the CFPB.
“Congress bestowed the powers to oversee student loans and student loan servicing solely to the Department of Education, and it was a mistake for the Obama administration to have the Department of Education let the CFPB abuse its privilege on these matters,” Foxx said in a news release. “The Department of Education has made it clear that its partnership with the CFPB is doing more harm than good when it comes to how it can best serve students and borrowers.”
“Specifically, the department has shown that a partnership with the CFPB was complicating and undermining its efforts to act in the best interest of borrowers and students,” Foxx said. “I am pleased that the department is taking its authority back from the CFPB, and remains committed to serving borrowers and students first.”
For its part, a CFPB spokesman indicated that bureau officials will ask the Education Department why it is severing operating agreements between the two, according to Politico.
Termination of the MOUs with the CFPB will be in effect Oct. 1.
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