On Thursday, June 22, 2017, the Consumer Financial Protection Bureau (CFPB) provided updated guidance for supervisory examinations of student loan servicers. Richard Cordray, the Director of the CFPB, gave prepared remarks in Washington D.C. He explained his concerns related to the Public Service Loan Forgiveness program and how certain practices may be delaying or denying borrowers’ access to this debt relief.

The Public Service Loan Forgiveness program allows those who accept certain public service jobs to have their debt forgiven after ten years. Director Cordray discussed a new CFPB report that highlights complaints concerning practices of student loan servicers that may hamper the program’s intentions. The report focused on analyzing a year of complaints from borrowers, which reflected a delay or denial of promised debt relief. Primarily, the complaints included incorrect, untimely, or inadequate information from servicers about borrowers’ eligibility for loan forgiveness. Other complaints from borrowers included slow payment processing and receiving inaccurate denial letters that can lead to qualified payments being miscounted or not properly credited.

The CFPB’s updated exam procedures attempt to guide “how examiners assess risks to consumers and review servicers’ compliance with the law when they administer this program,” seeking to guarantee stronger oversight of servicers’ administration of the program. Further, the examiners will “scrutinize whether servicers are telling consumers what they need to do to qualify for loan forgiveness” and check “whether servicers accurately calculate the number of qualifying payments to make sure that borrowers get their full benefits.” Cordray emphasized that “borrowers working in public service should not miss out on key consumer benefits because their student loan servicer failed to comply with the law.” The updated guidelines counsel agency examiners to ensure that loan servicers are informing borrowers about their requirements and obligations for loan forgiveness. Additionally, examiners ought to confirm that loan servicers accurately track the progress of borrowers and warn those that may be mistaken as to their pathway to loan forgiveness.

Alongside these updated exam procedures, the CFPB is conducting a campaign to make sure borrowers seeking to take advantage of the Public Service Loan Forgiveness program are fully aware of the tools available to ensure they can navigate the process and reap the benefits. This campaign has a specific emphasis on awareness for first responders and teachers.

It will be important to continue watching the CFPB’s action and administration concerning this program, to gauge the effectiveness of these new guidelines and how it may impact the inner working of loan servicers. Finally, how well the Public Service Loan Forgiveness program is perceived to be functioning could affect the survival of the program itself, given that the 2018 White House budget has suggested the elimination of the program altogether.