The U.S. Department of Education has refused to cooperate with the Consumer Financial Protection Bureau, according to CFPB Director Kathy Kraninger.
Kraninger recently sent a letter to Sen. Elizabeth Warren, D-MA, in response to the senator’s questions about the bureau’s efforts to protect student loan borrowers through its oversight of student loan servicers.
The student debt crisis is especially important to the mortgage industry as it is preventing many Millennials and even Gen Xers from buying a home.
This isn’t much of a surprise as student loan debt has racked up a collective $1.5 trillion bill for 44 million Americans, according to the Federal Reserve.
According to an analysis from LendingTree, 28% of homeowners owe a median of $28,557 in student debt, whereas 27% of renters have a median of $28,203.
“In the last 10 years, student loan balances have risen dramatically,” Kraninger said in her letter. “Accordingly, the bureau makes it a priority to focus on the financial literacy of students, to help students determine whether to enter into loans in the first place, and to assist them in understanding what it means once they do.”
But, according to Kraninger, there is one small problem: The Department of Education has been less than willing to cooperate.
She explained that the CFPB recognizes the importance of its relationship with the Department of Education, since it is the largest participant in the student lending market.
“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 loans held by the department based on the department’s guidance,” Kraninger said. “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.”
She explained the Department of Education terminated its Memorandum of Understanding with the CFPB back in October 2017.
“We have a responsibility in statute to have a MOU with the department and so it is a priority for us at the bureau to make progress on a new MOU,” she continued, saying she wants to have the private education loan ombudsman in place first in order to manage that conversation.
She explained in the letter that CFPB staff continue to analyze complaint data and can provide that analysis as technical assistance if requested by the department.
