Last Monday, the CFPB announced that it had entered into a new Memorandum of Understanding with the Department of Education to replace the MOU that was terminated by the ED effective October 1, 2017. The new MOU, which is effective as of January 31, 2020, is limited to the handling of student loan complaints. The announcement was followed by Director Kraninger’s appearance before the House Financial Services Committee last Thursday. At the hearing, Director Kraninger told lawmakers that the agencies were negotiating a second MOU to address supervision.
The new MOU allocates the handling of student loan borrower complaints between the CFPB and ED as follows:
The MOU provides that the agencies will meet at least quarterly “to discuss observations about the nature of complaints received, characteristics of borrowers, and available information about resolution of complaints, as well as analysis and recommendations.”
At the House hearing, Director Kraninger came under fire from Democratic Committee members regarding the CFPB’s supervision of federal student loan servicers. Since December 2017, based on ED guidance, servicers of certain federal student loans have declined to produce information requested by the Bureau’s examiners. (Last month, Democratic Senators Sherrod Brown and Robert Mendez, both members of the Senate Banking Committee, sent a letter to Director Kraninger criticizing the Bureau’s failure to resume examinations of federal student loan servicers.) As reported by American Banker, Director Kraninger told lawmakers at the House hearing that the CFPB and ED are working on a joint examination plan for federal student loan servicers under which the CFPB would examine for compliance with federal consumer financial laws and the ED would examine for contractual compliance. She also indicated that the agencies were negotiating a second MOU that would detail the new supervision process and indicated that she expected that MOU to be in place by year-end.