October 10, 2019
Brown and Murray Lay Out Expectations For New CFPB Student Loan Ombudsman
Washington, D.C. –
Sherrod Brown (D-OH), ranking member of the Senate Banking, Housing, and Urban
Affairs Committee, and Senator Patty Murray (D-WA), ranking member of the
Senate Health, Education, Labor, and Pensions (HELP) Committee, sent a letter
to the Consumer Financial Protection Bureau (CFPB) Student Loan Ombudsman Mr.
Robert Cameron laying out guiding principles and expectations for the Student
Loan Ombudsman's Office
“As you know,
the Consumer Financial Protection Act (CFPA) grants the Bureau broad
authority over the student loan industry, including the authority to issue
rules, examine student loan servicers and debt collectors, and bring public
enforcement actions against student loan servicers and debt collectors for
violation of federal consumer financial laws,”
the Senators wrote. “As
part of the CFPA, Congress also established the Student Loan Ombudsman
(“Ombudsman”) to serve as a dedicated resource and advocate for student loan
borrowers. Given this broad statutory authority
and background, we want to set out in writing our expectations for the CFPB
Last month, the
Senators sent a letter
to Cameron requesting a briefing on how he will carry his duties in his new
role given his potential conflicts of interest from working for the federal
student loan servicer Pennsylvania Higher Education Assistance Authority
The full text of the letter follows:
October 9, 2019
Financial Protection Bureau
1700 G Street,
Thank you for
meeting with our staff on September 18, 2019 to discuss your role as the
Consumer Financial Protection Bureau’s (“the Bureau,” or CFPB) Student Loan
Ombudsman. We appreciated hearing about your plans and priorities for the
position. As you know, the Consumer Financial Protection Act
grants the Bureau broad authority over the student loan industry, including the
authority to issue rules, examine student loan servicers and debt collectors,
and bring public enforcement actions against student loan servicers and debt
collectors for violation of federal consumer financial laws. As part of the
CFPA, Congress also established the Student Loan Ombudsman (“Ombudsman”) to
serve as a dedicated resource and advocate for student loan borrowers.
Given this broad statutory authority
and background, we want to set out in writing our expectations for the CFPB
expect you to serve as an advocate for student loan borrowers.
serves as an advocate for student loan borrowers, not the student loan
industry. As such, we expect you will fulfill this role by fully utilizing the
Bureau’s broad statutory authority and tools to carry out your duties as
Ombudsman. These roles and responsibilities include, but are not limited to,
the activities conducted by your predecessors, such as:
Policymaking: Chairing the CFPB’s “Cross-Bureau Working Group” on Student
Loans, which coordinated the Bureau's Research, Markets, Regulation,
Supervision, Enforcement, Consumer Response, and Consumer Education functions.
In this role, the Ombudsman leads all policymaking at the Bureau related to
student finance, including student lending, servicing, and debt collection. The
Ombudsman also serves as the Bureau’s primary liaison to the Administration,
and in particular to the U.S. Department of Education (“the Department”) and
U.S. Department of Treasury, on all matters related to federal student loan
servicing and debt collection, including regulation and enforcement.
Evidence for and Referring Cases for Examination or Investigation: Making
confidential referrals to CFPB Supervision and Enforcement, where complaints
provide potential evidence of misconduct by for-profit colleges (e.g.,
Corinthian Colleges, Inc., or ITT Educational Services, Inc.) or risks to
consumers (e.g., the Public Service Loan Forgiveness program). Making
confidential or public referrals to other federal law enforcement officials and
regulators where complaints provide evidence of illegal practices or risks to
consumers (e.g., U.S. Department of Justice or Federal Deposit Insurance
Corporation regarding Servicemembers Civil Relief Act violations).
Making confidential or public referrals to state attorneys general or state
banking regulators where complaints provide evidence of illegal practices or
risks to consumers.
Legislative and Policy Changes: Making recommendations to the Director, to
the Secretary of Treasury, to the Secretary of Education, and to Congress about
ways to address risks to private and federal student loan borrowers. The
Ombudsman also makes recommendations to other stakeholders across the student
loan system (e.g., state lawmakers, educational institutions, market
participants) and issues reports, such as “Student Loan Servicing: Analysis of
public input and recommendations for reform.”
Direct Assistance to Consumers: Providing direct assistance to consumers
with either private or federal student loans, typically when consumers required
escalated assistance beyond what the Bureau's Consumer Response function can
offer. For federal student loan borrowers, this involves independent casework,
not simply referrals to the Department or any of its sub-agencies or offices.
and Analyzing Data: Requesting data from student loan industry participants
to inform analyses, enforcement referrals, and recommendations. The Ombudsman
also requests data and information from student loan servicers, debt
collectors, student lenders, and credit reporting agencies, as needed, to
assist individual borrowers with complaints.
the Marketplace for Risks to Young Consumers: Monitoring instances where
financial services firms partner with colleges and universities to market
financial products to students, including student banking products and,
pursuant to Title III of the CARD Act, college-sponsored credit cards.
are critical to our collective work to protect and advocate for student loan
borrowers. We were pleased to hear that you believe that, when student loan
servicers make errors or harm borrowers, they should provide restitution and
remediation to make borrowers whole. You also confirmed that student loan
servicers have a responsibility to convey accurate and timely information to
borrowers. Therefore, we expect you to advocate for student loan borrowers when
you find that student loan servicers are failing to meet basic standards.
expect the Bureau to continue oversight of both private and federal student
announcement of your appointment as Ombudsman only referenced your
responsibility for private student loan oversight.
We appreciated hearing that, given the Bureau’s broad statutory authority over
the student loan industry, your work would cover both
federal student loans, including (1) reviewing and attempting to resolve
student borrower complaints; (2) reestablishing and maintaining a Memorandum of
Understanding (MOU) with Department; (3) compiling and analyzing data on
borrower complaints; and (4) making recommendation to the Bureau’s Director,
the Secretary of Treasury, the Secretary of Education, and to Congress.
expect you to ensure adequate staffing of the Ombudsman’s office.
that you are planning to hire additional staff for the Ombudsman’s Office to
fill extended vacancies. Ensuring that sufficient personnel exist to conduct
monitoring, examinations, and oversight of the student loan servicing industry
is critical. We expect that the office will be fully staffed within the next
expect you to carry out your work even if the U.S. Department of Education
attempts to interfere with the Bureau’s jurisdiction.
While there may
be instances where consultations with the Department may be helpful with regard
to federal student loans, the Department has repeatedly failed to protect
student loan borrowers or hold student loan servicers and debt collectors
accountable. The Bureau is an independent agency and, as Ombudsman, you have a
specific charge to protect all student loan borrowers. We, therefore, expect
you to carry out your oversight and monitoring duties independent of the Department.
Additionally, as Ombudsman, your analysis, advice, and recommendations should
represent your views, not those of the Department.
expect you to reestablish the Memorandum of Understanding (MOU) between the
U.S. Department of Education and the Bureau as soon as possible.
As you know, the
Department terminated the prior MOU with the Bureau effective October 1, 2017.
Since December 2017, based on
guidance from the Department, student loan servicers have refused to produce
the information necessary for the Bureau and other law enforcement agencies to
conduct routine examinations relating to federal student loans.
As a result, it appears that the
Bureau has been impeded from conducting full examinations of federal student
loan servicers since at least December 2017. We appreciate that you will
prioritize developing a new MOU with the Department. The Department, however,
has consistently delayed reestablishing the MOU. In a recent letter from
Director Kraninger, we were informed that the Bureau requested an MOU be
reestablished in 2018, but the Department had still not complied with the
At this point, the Bureau should not
tolerate any further delays in securing a new MOU and we look forward to seeing
the agreement finalized as soon as possible.
expect you to promptly resume examinations of federal student loan servicers.
should take immediate steps to ensure that it has access to all of the
information necessary to conduct full and complete examinations of federal
student loan servicers. In its litigation against Navient, for example, the
Bureau obtained a court order compelling the company to produce student loan
servicing records that the Department had otherwise refused to provide. The
Bureau should likewise seek a court order compelling the Department to provide
access to student loan information so that the Bureau can conduct examinations
of federal student loan servicers.
interference with the Bureau’s examination of federal student loan servicers is
unacceptable. However, the Bureau’s failure to stand up for student loan
borrowers despite the Department’s interference is equally disappointing. For
nearly two years, student loan servicers have caused often irreparable harm to
student loan borrowers with lax oversight by the Department and ongoing efforts
to interfere with law enforcement.
appreciate that you will conduct aggressive oversight and monitoring of student
loan servicers that break the law or fail to act in the best interest of borrowers.
expect you to carry out your duties free of conflicts of interest.
Based on your
prior work as Deputy Chief Counsel at the Pennsylvania Higher Education
Assistance Agency (PHEAA), we have raised concerns about potential conflicts of
interest that would prevent you from fully or effectively carrying out your
duties as Ombudsman. We also have concerns about PHEAA’s claims of sovereign
immunity to avoid lawsuits by state regulators during your tenure as Deputy
Chief Legal Counsel. During your meeting with our staff, you detailed your
prior work as Deputy Chief Counsel for PHEAA.
In response to
our concerns, we appreciate that you have, and will continue to, consult on all
ethics issues with the Bureau’s Legal Division and Designated Agency Ethics
Official regarding any recusals that may be necessary. For example, we
understand that matters affecting certain “rights and privileges” of PHEAA may
require recusal, but that other matters involving general student loan
servicing complaints may not require recusal.
additional information on what matters affect PHEAA’s “rights and privileges”
that would require your recusal. As you know, PHEAA is one of the largest
student loan servicers, and CFPB retains clear authority to open investigations
into the company’s potential violations of law, including deciding what claims the
Bureau should bring and what relief the Bureau should seek.
In order to
address these and other outstanding questions, we ask you to provide responses
to the following requests by October 25, 2019:
provide a written explanation of when you would be recused from any work or
involvement, including providing advice or recommendations, relating to PHEAA.
You should include a specific explanation work that affects “rights and
privileges” of PHEAA that would require your recusal. Please also provide any
official ethics guidance that has been issued to you by agency officials.
the briefing, the Bureau referred us to its April 23, 2019 letter to Senator
Brown in response to questions about the Bureau’s examination of federal
student loan servicers. That letter states:
In some exams [since December 2017], the examiners have
applied questions regarding PSLF, focusing on representations about PSLF that
servicers make to borrowers . . . . Since December 2017, student loan servicers
have declined to produce information requested by the Bureau for supervisory
examinations related to Direct Loans and Federal Family Education Loan Program
(FFELP) loans held by the Department based on the Department’s Guidance. The
Bureau has pursued options that would have permitted it to obtain
information from student loan servicers necessary for supervisory examinations
of Direct loans and Department-held FFELP loans.” (Emphasis added).
Bureau’s April 23, 2019 letter suggests, but is not clear, that the Bureau has
not been able to examine federal student loan servicers, and has only had a
limited ability to examine their administration of PSLF. To clarify, please
answer the following:
December 2017, has the Bureau has conducted full and complete
supervisory examinations related to Direct Loans and FFELP?
January 20, 2017, has the Bureau conducted any full and complete
examinations (aside from a limited review of representations about PSLF) of
student loan servicers administration of PSLF?
provide a list of current full-time equivalent staff in the Ombudsman’s office
disaggregated by main job functions, the number of staff you hope to hire in
such functions, and the anticipated dates by which this hiring will be
Senate Committee on Banking, Housing,
and Urban Affairs
Senate Committee on Health, Education,
Labor, and Pensions
from Director Kraninger, Consumer Financial Protection Bureau, to Senator
Sherrod Brown, Ranking Member, Senate Committee on Banking, Housing, and Urban
Affairs. April 23, 2019.
from Director Kraninger to Senators Sherrod Brown and Patty Murray regarding
the Bureau’s Memorandum of Understanding for federal student loans. September
3, 2019. https://go.usa.gov/xVFBC