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AFR Statement: DeVos Decision to stop working with the CFPB is a betrayal of students and a boon to bad actors

Submitted by on September 5, 2017 – 2:53 pm
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For immediate release
September 5, 2017
Contact: Alexis Goldstein, alexis@ourfinancialsecurity.org, 202-973-8005

The Department of Education’s decision to end information sharing with the Consumer Financial Protection Bureau (CFPB) is a betrayal of students and a boon to loan servicers with a history of preying on those students. The Department terminated a memorandum of understanding (MOU) with the Bureau that was put in place to ensure coordination between the agencies so that students with complaints about private education or Federal student loans got the assistance they needed. DeVos also decided to end cooperation with the Bureau regarding the oversight of student financial services, such as supervision of loan servicers.

“Rather than collaborating to get more relief to students who’ve fallen prey to industry scams, and to prevent future abuses, DeVos has chosen to make oversight more difficult and accountability harder to come by,” said Alexis Goldstein, AFR’s Senior Policy Analyst.

The Bureau has long been on the forefront of working to ensure servicers like Navient, who’ve illegally overcharged Americans, including members of the military, are held accountable; the Bureau sued Navient earlier this year for illegally steering struggling borrowers toward paying more than they had to on their loans.  And past coordination between the Department of Education and the Consumer Bureau has, to name just one example, helped to secure $480 million in relief for Corinthian students who were targeted with a predatory private loan program.  DeVos’s decision is not just an abdication of responsibility, it’s yet another move that shows the Department choosing to act in the interests of big student loan servicers instead of students and borrowers.

This action by Secretary DeVos not only abdicates the Department’s responsibility to protect students, it also defies Congress, as the complaint-sharing MOU was specifically required by Dodd-Frank. And the news comes on the heels of another decision by the Department to favor for-profit entities over students, as it tapped former DeVry official Julian Schmoke Jr. to head the Department’s enforcement unit, despite his having no background in law enforcement or investigations.

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