Dept. of Education Expands Enforcement, Limits CFPB Role
Fri 03 Nov, 2017 / by McIntyre & Lemon / Client Alerts
11/03/17 – The Department of Education (Ed. Department) has taken steps to increase its role in the oversight and enforcement of student aid programs and limit the role of the Consumer Financial Protection Bureau (CFPB).
The Ed. Department recently delivered a letter to the CFPB terminating two Memoranda of Understanding (MOUs) between the agencies. The letter criticizes the CFPB for expanding its role and jurisdiction in the supervising and enforcing Title IV federal student loans. The letter states that the Ed. Department has “full oversight responsibility for federal student loans.” The termination of the MOUs means that the Ed. Department will no longer share information and will no longer cooperate with the CFPB in regards to student financial services oversight and supervisory activities.
On the same day as the letter, Secretary of Education Betsy DeVos announced that the Ed. Department would take a stronger approach in how Federal Student Aid (FSA) enforces compliance by institutions participating in the Federal student aid programs. Following this announcement, the FSA added several new leaders across the organization in the areas of enforcement, outreach, communications, and risk management.
The new approach looks to enhance the efforts of the FSA’s oversight responsibilities, including enforcement against bad actors, such as illegitimate debt relief organizations, schools defrauding students and institutions willfully ignoring their Clery Act responsibilities. To accomplish this new approach, the FSA recently began transforming its oversight function by broadening its scope, increasing its capacity and adopting a more sophisticated strategy.