In its continuing effort to ramp up oversight of student loans, on January 30, 2014, the CFPB announced the opening of a new online student complaint system specifically for servicemembers, veterans, and their families to report negative experiences at education institutions and training programs administering the Post-9/11 GI Bill, DoD Military Tuition Assistance, and other military-related education benefit programs.
The announcement comes on the heels of CFPB Director Richard Cordray’s recent testimony before the House Committee on Financial Services. During his testimony, Director Cordray stated that the CFPB had received nearly 30,000 comments in response to its request for public information about how student debt affects individual consumers and the overall economy. He also reiterated sentiments that the CFPB sees students taking out loans on less than favorable terms, resulting in those students having difficulty purchasing homes, starting businesses or saving for the future.
Director Cordray met with some of the nation’s largest private student lenders and servicers on January 9, 2014 after having requested that financial institutions publicly disclose agreements with colleges and universities, apparently as part of an effort to eliminate kickbacks to schools. As we have seen a recent trend of enforcement actions against kickbacks in the mortgage insurance context, kickbacks in the student loan industry are likely to be under heavy scrutiny in the months to come.