C. F. P. B.
CFPB:The Consumer Financial Protection BureauWhat it means to
youin Higher Education!
October 26, 2014 Carl Perry Progressive Financial Services,
Inc.Title ScreenCFPB effects all of us in higher education,
Collection Contractors, Serviceres & Schools!1Agenda:
Overview of CFPB
Higher Education
Who is who?
Your Business Partners
Overview of CFPBKey players & relationshipsStatutes2013
PrioritiesHistory of CFPBCFPB & Higher EdPrivate Student
Loans3rd Party BusinessesVeterans AdministrationResource &
Advocate vs. RegulatorCreating an effective partnershipInforming
Policy
2 Overview of CFPB:
The second column is the one that we should pay attention to!3
Key Players in CFPB:ManagementRichard Cordray, DirectorRohit
Chopra, Assistant Director StudentsHolly Petraeus, Assistant
Director Service Member AffairsRelationshipsDepartment of
EducationDepartment of TreasuryDepartment of JusticeVeterans
Affairs and Department of Defense
I met Rohit at SLSA in Seattle and in DC with COHEAO and NCHER.
Our COHEAO group had a meeting with him when we were at the COHEAO
Annual Conference.4 Role & Responsibilities:CFPB established to
protect consumers:Conduct rule-making, supervision, and enforcement
for Federal consumer financial protection lawsRestrict unfair,
deceptive, or abusive acts or practicesTake consumer
complaintsPromote financial educationResearch consumer
behaviorMonitor financial markets for new risks to consumersEnforce
laws that outlaw discrimination and other unfair treatment in
consumer financePresident Obama appointedRichard CordrayDirector,
CFPB in Jan 2012
This went through a long and sometimes ugly process but it is
now official.5Role & Responsibilities:Not regulators of
schools, but of financial institutionsSeek to arm schools with
better tools to evaluate financial institutions offeringsWhen the
school is a lenderPartnerships with banksHigh cost private
loansAdvocating redefinition of disclosure requirements to include
TVII (HHS) loans with federal loans
2013-2014 Strategic Priorities:Greater involvement in the
private loan processRequiring school certification of ALL private
loansFinancial educationResearch shows much of the financial
literacy efforts are ineffectiveServicing CollectionsIncentive
payments to schools*When the school is encouraging students to
establish bank accounts to receive financial aid refunds!7CFPB
Requests Information:Financial Products Marketed to Students
Enrolled in Institutions of Higher EducationFocus on campus
affinity productsFinancial products and services that carry an
endorsement (either explicit or implicit) or mark of an institution
of higher education, e.g., one card student ID-purchase cards;
disbursement debit cards, etc.Not an investigation of any agreement
or school, but a quest to understand how schools enter into these
agreementsContinue to request information regarding issues that are
of interest to CFPB
Prior requests for Information:Initiative to Promote Student
Loan AffordabilityFocus on alternative repayment options for
private student loan borrowersComments were due by April 8,
2013CFPB did a ANPRM on the FDCPA in early 2014
Higher Education:Resource and advocate versus regulatorInform
policy makingCreate tools for prospective borrowersDrive students
and families to borrow lessAddress underutilized federal borrowing
capacityThey would like schools to conduct their own analysis of
private borrowers to determine who isnt using their federal
eligibility and why not!10Higher Education:
Higher Education:
Higher Education:
Higher Education:
Financial Aid Shopping Sheet:
Estimated Cost of AttendanceGrants and ScholarshipsNet CostsWork
OptionsLoan OptionsOther OptionsThe Department of Education and the
CFPB introduced the financial aid shopping sheet
An effort to make information about the cost of college and
financial aid packages more transparent and comparable for students
and parents
Schools that signed onto the Principles of Excellence would be
required to send the Shopping Sheet to prospectiveundergraduate
students who are veterans or active duty military, and their
families. Use of the Shopping Sheet for any other student is
voluntary
Institutions would not be required to substitute this Shopping
Sheet for their own financial aid award letters
Populated data will be based on comparable schools as defined by
the Department
Source:
http://www.nasfaa.org/advocacy/award-letter/CFPB,_ED_Issue_Final_Version_of_Financial_Aid_Shopping_Sheet.aspx
15The Department of Education and the CFPB introduced the
financial aid shopping sheet
An effort to make information about the cost of college and
financial aid packages more transparent and comparable for students
and parents
Schools that signed onto the Principles of Excellence would be
required to send the Shopping Sheet to prospectiveundergraduate
students who are veterans or active duty military, and their
families.
Use of the Shopping Sheet for any other student is voluntary
Financial Aid Shopping Sheet:Institutions would not be required
to substitute this Shopping Sheet for their own financial aid award
lettersPopulated data will be based on comparable schools as
defined by the
Departmenthttp://www.nasfaa.org/advocacy/award-letter/CFPB,_ED_Issue_Final_Version_of
_Financial_Aid_Shopping_Sheet.aspx
More on Financial Aid Shopping Sheet: Annual Report of the CFPB
Student Loan Ombudsman:The CFPB received nearly 2,900 public
private student loan complaints
This is a relatively small number given that there are more than
$150 billion in private student loans outstandingThe vast majority
of the complaints were related to loan servicing and loan
modification issuesActive-duty service members and their families
reported that they sometimes experience difficulty exercising their
rights under the Service Members Civil Relief Act
10-16-14 the Consumer Financial Protection Bureau (CFPB)
released its third Annual Report of the CFPB Student Loan
Ombudsman. As with past reports, it focuses on borrower complaints
made about private education loans; this time approximately 5,300
complaints were received from October 1, 2013 through September 30,
2014. The primary complaints relate to what borrowers see as a
"lack of repayment options and flexibility in times of distress. In
addition to private education loan complaints, the report briefly
addresses approximately 2,700 collection complaints related to
student loans over the same period. According to the report, many
borrowers requested repayment relief and modified repayment plans
during periods of financial distress, but private loan lenders and
servicers provided no assistance. The report suggests that such
complaints closely mirror problems found in the mortgage servicing
market, as large numbers of homeowners sought to avoid foreclosure.
This echoes a common theme of the Bureau that private student loans
and sub-prime mortgages share similar characteristics.The report
urges private education loan providers and servicers to engage with
distressed borrowers to find workout solutions, suggesting that
regulators and policymakers have paved the way for them to do so.
Finally, the report attempts to tie bankruptcy protections now
afforded to private loans to the lack of meaningful repayment
relief, suggesting (without too much in the way of relevant data)
that the bankruptcy protection reduces incentives for lenders to
work with borrowers prior to default.
18 Service Member Affairs:Focus on Planning for Your Future
& Protecting Your FinancesPlanning for Your FutureHelping you
saveDollars for degreesProtecting Your FinancesAccessing your VA
benefitsDeployment and your credit card
Service Member Affairs:Learn about and raise awareness of unique
military-friendly products already being offered by financial
institutionsStart a dialogue between the financial-services
industry and the military services about how to best serve those
who serve our country
Service Member Affairs:
Business Processes Impacted:Private Loans
Debit/Campus Cards
Banking
Collection Agencies
Private (alternative) Loans:Lender
RequirementsStatutoryRegulatoryInstitutional RequirementsTILASLSA,
NCHER & ACA are active hereDo we have input from the attendees?
Debit Cards:Student RefundsWho issues cardsStudents
accountsFeesVendors and IssuesRevenue sharing
NACUBOs Best Practices: Debit Cards:Keep Students FirstEncourage
Students to Use Financial InstitutionsOffer ChoicesEncourage
Electronic RefundsUtilize a Competitive Process and Limit
ExclusivityEngage Students in the Vendor Selection Process
NACUBOs Best Practices: Debit Cards:Comply with Federal and
State RegulationsNegotiate Low or No-Fee Options and Convenient
Services for StudentsAvoid Unscrupulous MarketingMake Contracts
TransparentDo you have a best practice to share?The CFPB oversight
of consumer compliance rules from 7 agencies:Federal Reserve
Board;Office of the Comptroller of the Currency;Federal Deposit
Insurance Corp.;Office of Thrift Supervision;National Credit Union
Administration;Federal Trade Commission; andDepartment of Housing
and Urban DevelopmentThe CFPB is in a position unique amongst
federal financial regulatory agencies. Created as a resultof the
recent financial crisis, the CFPB has broad powers to promote its
sole mission of educatingand protecting consumers as they navigate
their way through financial services transactions.For the first six
months after its July 21, 2011, launch date, the CFPB was hampered
by a provisionin the Dodd-Frank Act indicating that the bureau
could not exercise full rulemaking powers until adirector was in
place. That director was not appointed until January 2012. However,
the CFPBworked during those months to promote its mission by
instituting and moving forward on a numberof consumer protection
initiatives.With the appointment of Cordray in place, the CFPB
rapidly instituted consumer protectionrulemaking while continuing
to move forward with the initiatives it developed in the months
beforea director was put into place.As it moves forward, the
direction and vision of the CFPB is clearly stated. The CFPB
intends touse the authority granted by the Dodd-Frank Act to ensure
that financial markets operate fairly,make certain that consumers
are aware of the true costs, benefits and risks of competing
productsand hold financial providers accountable for violations of
consumer financial protections.27 CFPB Complaint
Portal:http://www.consumerfinance.gov/complaint/What happens after
I submit a complaint?CFPB forwards your complaint to the company
and work to get a response. After they forward your complaint, the
company has 15 days to respond to you and the CFPB. Companies are
expected to close all but the most complicated complaints within 60
days. Youll be able to review the response and give CFPB feedback.
If we find that another agency would be better able to assist, we
will forward your complaint and let you know.
CFPB Complaint Portal:How will you use my information?We forward
the information you provide so the company can identify you and
address your issue. We also share complaint data with state and
federal agencies who oversee financial products and services, and
we publish a database of non-personal complaint information so the
public knows what kinds of complaints we receive and how companies
respond.
Banking:Financial relationships/conditions in contracts.Impact
on students/families
Collection Agencies:CFPB requirements on third party debt
collectors.I would make sure my agencies were on the portal!Impact
on colleges/universities.What should you look for?
Recent News:A report from the Consumer Financial Protection
Bureau cites a 38% increase in complaints from private student-loan
borrowers, many of whom said lenders are not flexible about
repayment terms. CBA General Counsel Steve Zeisel said most
borrowers are successfully repaying their loans, but CBA is
"working with the prudential regulators to develop short and long
term loan modification programs to provide borrowers with more
flexibility, particularly in the early stages of their career."
Resources:CFPB Websitewww.consumerfinance.govCFPB RFI: Alternative
Repayment Options for Private Student Loan
Borrowershttp://files.consumerfinance.gov/f/201302_cfpb_rfi_student_loan_affordability.pdfCFPB
RFI: Financial Products Marketed to
Studentshttp://www.consumerfinance.gov/students/whats-the-deal/request-for-information-regarding-financial-products-marketed-to-students-enrolled-in-institutions-of-higher-education/Private
Student Loan Report Updated
8/29/2012http://www.consumerfinance.gov/reports/private-student-loans-report/
Financial Aid Shopping
Sheet:http://www.nasfaa.org/advocacy/award-letter/CFPB,_ED_Issue_Final_Version_of_Financial_Aid_Shopping_Sheet.aspx
Questions & Input!Carl Perry
[email protected] President of
COHEAOSenior Vice President
Thank you for your time and attention!
