Recently, the CFPB updated their education loan examination procedures to include modules grouping similar requirements together. This particular update applies to the CFPB’s examination of private education lending and student loan servicing. Any depository institution, their affiliates, and non-bank entities in the private education lending market, as well as their service providers, are covered under these procedures.
The Dodd-Frank Act gave the CFPB supervisory authority over a variety of institutions who engage in private education lending or servicing. Part of the CFPB’s authority includes examining regulated entities with certain objectives in mind. These include assessing the quality of the entity’s compliance risk management system, identifying acts or practices that increase the risk of running afoul of federal consumer protection laws, gathering facts to determine if an entity engages in acts that are likely to lead to a violation of such laws, and determining whether enforcement action is necessary if a violation has taken place.
To help achieve these examination objectives, the CFPB’s newest update to their education loan examination procedures includes various topic modules. In many cases, these modules will focus the scope on either origination or servicing of loans managed by the entity. Examinations will typically cover one or more of the following modules:
- Advertising, Marketing, and Lead Generation
- Customer Application, Qualification, Loan Origination, and Disbursement
- Student Loan Servicing
- Borrower Inquiries and Complaints
- Collections, Accounts in Default, and Credit Reporting
- Information Sharing and Privacy
- Examination Conclusion and Wrap-up
Module 7 – Examination Conclusions and Wrap-up is mandatory.
In conducting these examinations, the CFPB has said it will pay particular attention to risks to consumers not governed by specific statutory or regulatory provisions, including unfair, deceptive, or abusive acts or practices (UDAAPs). This update has sought to incorporate lessons learned by examiners over the past three years while working with regulated entities and reflects renewed supervisory priorities.
The full Education Loan Examination Procedures may be found here: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/102016_cfpb_EducationLoanServicingExamManualUpdate.pdf.