CFPB announces higher education memorandum of understanding


The CFPB announced that it has entered into a “Joint Higher Education Memorandum of Understanding” with the Departments of Veterans Affairs (VA), Defense (DOD), and Education (ED) as part of a joint effort by the agencies “to prevent abusive and deceptive recruiting practices by schools serving servicemembers, veterans, spouses and other family members.” 

The MOU is described as carrying out the agencies’ “comprehensive strategy to strengthen enforcement and compliance mechanisms” developed in accordance with Executive Order 13607 signed by President Obama in April 2012. The order directed the Secretaries of Defense, VA, and Education to consult with the CFPB and the Department of Justice to take action to ensure that service members, veterans, spouses and other family members “have the information they need to make informed decisions concerning their well-earned Federal military and veterans educational benefits.” The Executive Order was intended to combat concerns about aggressive and deceptive targeting of such individuals by educational institutions to gain access to educational benefits. It also mandated the creation of uniform procedures for referring potential matters for civil or criminal enforcement to the DOJ or other agencies. 

Under the Executive Order, the VA, DOD and ED were directed to establish “Principles of Excellence” (Principles) to apply to educational institutions receiving funding from federal military and veterans educational benefits programs. The Principles must require such educational institutions to provide various disclosures and protections, including information about school costs and federal financial aid eligibility as well as student support services. The MOU sets forth the responsibilities of each agency to support the Principles.

In the MOU, the CFPB agrees to:

  • Designate its Assistant Director for Servicemember Affairs (currently Holly Petraeus) to serve as the point of contact for information sharing processes among the agencies
  • Send alerts to each agency regarding potential significant trends and patterns of noncompliance identified in ongoing oversight activities
  • Provide complaint data to the FTC’s Consumer Sentinel database

The Executive Order also required the creation of a centralized complaint system for students receiving military and veterans educational benefits to register complaints that can be responded to by various agencies including the CFPB. That system was launched in January 2014. In addition to submitting complaints about student loans via the CFPB’s complaint system, the system allows servicemembers using VA or DOD education benefits for higher education to submit complaints about educational institutions on the DOD or VA websites using new customized online reporting forms. Complaints received by the DOD or VA are forwarded to the FTC’s Consumer Sentinel database.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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