After Violating Federal Law for Two Years, Trump’s CFPB and Dept of Education Finally Agree to Interagency Cooperation Agreement
Yet Administration Continues to Illegally Shield Loan Servicers, Lawsuit Moves Forward to Protect Over 40 Million Student Borrowers at Risk
Washington, D.C. — Following the agencies’ reinstatement of a legally required Memorandum of Understanding (MOU) for interagency cooperation in resolving student borrower complaints, Democracy Forward is pressing forward with its lawsuit, on behalf of Student Debt Crisis, to protect student borrowers from neglect by the Department of Education and Consumer Financial Protection Bureau because the CFPB continues to shirk its legal obligation to supervise large student loan servicers.
Democracy Forward released the following statement in response to the recent announcement of a renewed MOU:
“For two years, the Trump administration willfully violated the law by abandoning a required interagency agreement intended to facilitate protection of student borrowers from abusive loan servicers. There’s no question that the administration would have continued down the path of unlawfulness if not for sustained legal, Congressional, and public pressure. But with over 40 million student borrowers at risk, the administration’s begrudging, half-step approach to its legal duties is simply not sufficient. As long as the administration continues its unlawful refusal to supervise over 80% of the student loan market, our lawsuit will continue.”
Background: In November 2019, Democracy Forward, on behalf of Student Debt Crisis, sued the Department of Education and the Consumer Financial Protection Bureau for unlawfully refusing to supervise large student loan servicers. Federal law requires CFPB to supervise large nonbank loan servicers, including companies that manage the country’s Public Student Loan Forgiveness (PSLF) program, to ensure compliance with federal consumer financial protection requirements. As the filings in this case show, without any reasoned explanation or opportunity for public comment, CFPB has unlawfully ceased its supervision of federal loan servicers. In turn, more than 40 million student loan borrowers with over a trillion in debt are at greater risk of being cheated by these companies.