The reason for the shift toward the CFPB asserting more power over non-bank lenders is that there’s no choice for the consumer; student borrowers can’t pick which lender is contracted by a bank, or the government, to manage federal and private student loans. Most times the loan servicer is different than the actual lender.
While the CFPB has been receiving complaints about servicers and the way in which they collect debt payments, the bureau hasn’t been able to ensure that the servicing companies follow the same regulations as traditional lenders. Non-bank student lender service companies currently hold $49 million in student accounts.
The CFPB has made public their proposal to assert power over the country’s seven largest non-band student lenders and the public has sixty (60) days to offer comment and input on the new rule. You will need Adobe® Reader® in order to review the Consumer Financial Protection Bureau’s document, “Defining Larger Participants of the Student Loan Servicing Market“.