Student lenders are the subject of the Consumer Financial Protection Bureau’s latest examination field guide. The CFPB has authority to supervise large banks and nonbanks that make private student loans. The agency said the procedures released on Dec. 17 apply to both types of lenders.
“For many borrowers, a student loan may be their first major financial decision,” said CFPB Director Richard Cordray. “With student debt topping a trillion dollars, we will be working to ensure consumers are treated fairly and lenders are held accountable.”
The bureau has released several other examination manuals tailored to the specific financial products and industries it scrutinizes. The agency released its examination field guide for the debt collection industry in October. The Student Lending Examination Procedures are an extension of the CFPB’s General Supervision and Examination Manual and will be used as a field guide by CFPB examiners to ensure that private student lenders comply with federal consumer financial laws.
Similar to previous CFPB manuals and other guidance, the bureau’s most recent manual indicated examiners will evaluate the compliance obligations of both lenders and their third-party service providers.
Examiners will review student lenders’ marketing and advertising materials to make sure the materials are not deceptive, misleading or discriminatory. Materials to be reviewed include mailers, text messages and telephone solicitation scripts.
The CFPB plans to assess whether the lenders or service providers make proper, clear disclosures about loan costs and terms at the time of the consumer’s application, loan approval and loan disbursement as required under rules pertaining to education lending. Lenders will also be reviewed for their adherence to applicable requirements regarding periodic statements that include such information as monthly payment requirements, charges, fees and interest rate changes.
Examiners will determine if a lender or service provider has adequate and effective channels to receive customer questions and complaints, the CFPB said. “Examiners will also evaluate the systems, procedures and policies used by the company for tracking, handling, investigating, and resolving consumer inquiries, disputes and complaints.”
The CFPB said bureau supervision is an ongoing process of pre-examination scoping and review of information, data analysis, onsite examinations and regular communication with supervised entities, as well as follow-up monitoring.
“When necessary, examiners will coordinate and work closely with the CFPB’s enforcement staff to take appropriate enforcement actions to address harm to consumers,” the bureau said.
In addition to the release of its student lending examination manual, unveiled a suite of interactive consumer web tools intended to help students and families shop for loans, compare aid offers, manage money while in college and navigate repayment options. The tools — currently in the beta stage of development — are based on information gleaned from CFPB pilot programs and discussions with financial experts, lenders, policymakers and student borrowers.
View the CFPB’s Student Lending Examination Procedures manual
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