On December 16, 2024, the CFPB issued a special edition of its Supervisory Highlights describing a range of unlawful activities identified by CFPB examiners across student loan markets. The report covers violations related to student loan refinancing, private lending and servicing, debt collection, and federal loan servicing.
The report details how CFPB examiners uncovered various instances of companies participating in unlawful practices within the student loan markets. These findings highlight a range of illegal practices, including:
Lenders misleading borrowers and failing to carry out their instructions for refinancing. Refinancing or consolidating federal loans with a private lender results in losing key federal protections. CFPB examiners found that lenders misled borrowers about retaining access to federal loan cancellation programs and did not re-amortize consolidated loans when requested.
Private lenders deceiving borrowers or denying benefits. Supervision found that lenders unfairly denied discharge applications for eligible borrowers with Total and Permanent Disability status. Additionally, lenders inaccurately claimed some borrowers were ineligible for autopay discounts and misrepresented the option to suspend loan payments if they lost their job, later eliminating that benefit.
Servicers failing to address claims related to school misconduct. Many private student loans from schools allow borrowers to challenge their loans due to school misconduct. However, CFPB examiners found that servicers misled borrowers about this right and did not adequately consider their claims. The CFPB has instructed these entities to establish better systems for evaluating such claims.
Servicers distributing contracts allowing illegal collection tactics. CFPB supervision uncovered institutional loan contracts with provisions that would allow schools to illegally withhold students’ academic transcripts or access to classes and other education services in the case of default. Some servicers also falsely threatened students with legal action.
Federal loan servicers harming borrowers during return to repayment. The Consumer Financial Protection Bureau (CFPB) found that federal loan servicers failed to provide adequate phone support for borrowers to address key loan issues. They issued misleading billing statements with incorrect amounts and due dates and debited unauthorized payments. Additionally, there were significant problems with how servicers processed applications for income-driven repayment plans.
The CFPB’s press release can be found here.
Read the full Supervisory Highlights here.