During what it dubbed "National Consumer Protection Week," on March 5, 2012, the Consumer Financial Protection Bureau ("CFPB") announced that it would begin accepting consumer complaints related to student loans.1 In a blog post announcing the new complaint system, CFPB Student Loan Ombudsman Rohit Chopra stated that "private student loans – which don't always carry the same consumer protections as federal student loans – have been overseen by a patchwork of government agencies."2 Mr. Chopra went on conclude that Dodd-Frank's creation of his ombudsman position "means a single federal agency is now responsible for watching out for all students and families who choose to borrow private student loans."
The student loan complaint system aims to facilitate the resolution of disputes between consumers and lenders or debt servicers. Consumers without a specific complaint are invited to tell their story about "what is – or is not – working in the student loan market." Mr. Chopra's blog also directs readers to the CFPB's "Student Debt Repayment Assistant" and its proposed "financial aid shopping sheet."
The new student loan complaint system is just the latest endeavor in the CFPB's increasing oversight of financial institutions, following in the footsteps of CFPB initiatives related to mortgage lending, credit cards, deposit accounts and vehicle or consumer loans. Financial institutions should proactively assess their operations in areas regulated by the CFPB and keep abreast of the ever-expanding scope of the CFPB's oversight in areas traditionally within the prudential regulators' purview.
1 This was the CFPB's second expansion of its consumer complaint system in less than a week. As we reported in a previous Alert, the CFPB announced that it was accepting consumer complaints regarding deposit accounts on March 1, 2012.
2 The Department of Education Ombudsman's Office was established in 1998, but its services were limited to federal student loans. Section 1035 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") established a similar ombudsman program within the CFPB to resolve disputes, analyze data and make recommendations related to private student loans.