CFPB Warns of Heightened Scrutiny of Servicers’ PSLF Management
By Hugh T. Ferguson, NASFAA Senior Staff Reporter
An announcement from the Consumer Financial Protection Bureau (CFPB) on Friday signals that the agency will be cracking down on student loan servicer conduct regarding borrowers’ eligibility for benefits provided under the recently issued Public Service Loan Forgiveness (PSLF) waiver.
CFPB said it would be working closely with the Department of Education (ED) to ensure that the promise of debt cancellation through the PSLF program is honored, and that servicers are applying the benefits of the waiver to eligible borrowers in non-deceptive ways.
In citing its supervision of the servicing sector, CFPB said it has “found that servicers made deceptive statements to borrowers about their ability to become eligible for PSLF,” resulting in borrowers being held responsible for tens of thousands of dollars in loan amounts that should have been canceled.
With ED’s PSLF waiver announcement, CFPB detailed how more borrowers have been made eligible under the program — along with the expectation that servicers carry out those newly available benefits. A recent webinar hosted by Sen. Bob Casey’s (D-Pa.) office detailed the current landscape of loan forgiveness programs available to public servants.
The @CFPB will be working closely with the @usedgov to make sure loan cancellation promises for public service are honored.https://t.co/9cj6NxFd2x
— Rohit Chopra (@chopracfpb) February 18, 2022
Servicers are expected to comply with the waiver requirements, with CFPB noting that it would be deploying “enforcement and supervision resources” in the coming year. According to CFPB, officials will be paying particular interest to whether:
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Servicers of any federal loan type provide complete and accurate information about the PSLF Waiver when discussing PSLF or loan consolidation in any communications;
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Servicers have adequate policies and procedures to recognize when borrowers are expressing interest in PSLF or the PSLF Waiver, or where their files otherwise demonstrate their eligibility, and to direct those borrowers to appropriate resources; and
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Servicers take steps to promote the benefits of the PSLF Waiver to borrowers who express interest or whose files otherwise demonstrate their eligibility.
CFPB urged student loan servicers to enhance their compliance management systems to ensure that policies and procedures are put in place to ensure that accurate and complete information is provided to those in public service who are eligible for the benefit.
Publication Date: 2/23/2022
Robert W | 2/24/2022 7:55:22 AM
Perhap's ED should take all the loan servicing in house, if the servicers are really doing such a poor job. Let ED service the loans and Mr. Chopra can be the ruler of their performance. Just my opinion.
Bob Walker
David S | 2/23/2022 4:22:55 PM
Oops...I meant to say "incentive," not "disincentive." NASFAA, you're getting the complaint that Twitter gets from users...an edit function would be helpful here ;)
David S | 2/23/2022 4:21:38 PM
The model of only designating one servicer dedicated to all PSLF accounts, at the very least, makes one wonder if there's a built-in disincentive for non-PSLF servicers to steer eligible borrowers away from it or not be very motivated to provide accurate and helpful information. And having a Secretary of Education who (unlike his predecessor) believes that PSLF should work as Congress intended has been an improvement.
Nathan W | 2/23/2022 12:5:26 PM
Just got a call from FSA the other day regarding my own PSLF status. Rep. on the phone gave nothing but incorrect information regarding my student loans. I purposefully don't tell them my profession until after I ask my questions... the silence on the other end is almost hysterical. This issue is being referred to in the past tense, it's still on going.
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