WASHINGTON (7/10/15)--CUNA welcomes Consumer Financial Protection Bureau (CFPB) efforts to increase transparency and accountability in the student loan servicing process. Responding to the bureau’s request for information on student loan servicing, CUNA submitted a letter Thursday.
“We ask the CFPB to employ a targeted approach [to problem areas] that focuses its attention on the entities--including third-party servicers--that have been the source of the majority of consumer complaints in this area,” the letter reads, adding that it is important the CFPB recognize that credit unions are not among the bad actors mentioned in the CFPB request for information.
A number of credit unions originate student loans for their members, and often rely on third parties to service the loan. Servicers’ duties typically include managing borrowers’ accounts, processing monthly payments and communicating with borrowers.
“CUNA believes that student loan borrowers should be entitled to appropriate and reasonable disclosures, access to information, accurate and timely application of payments, and timely resolution of account errors,” the letter reads, adding that most third-party servicers used by credit unions already provide student loan borrowers with those entitlements.
There is no existing comprehensive statutory or regulatory framework that provides uniform standards for the servicing of student loans, although there are protections for federal student loan borrowers related to certain aspects of the repayment process.
“Recognizing that there are similarities between the servicing problems encountered by student loan borrowers and those experienced by borrowers of other financial products, we believe it is appropriate to review the protections for mortgage and credit card borrowers,” the letter reads. “However, we urge the Bureau to rely on the protections in these other areas as a guide only, as student loans and student loan servicing are quite different from mortgages and credit cards.”