The CFPB Proposes Supervision of Certain Nonbank Student Loan Servicers
On Thursday, March 14, 2013, the Consumer Financial Protection Bureau (the "CFPB") propoed, pursuant to Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a rule that would identify a market for student loan servicing, and define certain nonbank student loan servicers as "larger participants," thereby allowing the CFPB to oversee their activity for compliance with federal consumer financial laws. The stated goal of the CFPB is to ensure that banks and certain nonbanks are following the same rules in the student loan servicing market. The proposed rule for student loan servicers would be the third market in which the CFPB has defined larger participants, after consumer reporting and debt collection.
Under the current rules, the CFPB has the authority to supervise nonbank covered entities of all sizes in the residential mortgage, private education lending, and payday lending markets. The CFPB also has the authority to supervise nonbank “larger participants” of markets for other consumer financial products or services, as the CFPB defines by rule.
Read the CFPB release