[Federal Register Volume 87, Number 195 (Tuesday, October 11, 2022)]
[Notices]
[Pages 61294-61304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-22056]


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BUREAU OF CONSUMER FINANCIAL PROTECTION


Supervisory Highlights, Issue 27, Fall 2022

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Supervisory highlights.

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SUMMARY: The Consumer Financial Protection Bureau (CFPB or Bureau) is 
issuing its twenty-seventh edition of Supervisory Highlights.

DATES: The Bureau released this edition of the Supervisory Highlights 
on its website on September 29, 2022. The findings included in this 
report cover examinations of student loan servicers.

FOR FURTHER INFORMATION CONTACT: Austin Hinkle, Senior Counsel, Office 
of Supervision Policy, at (202) 435-9506 or Pax Tirrell, Counsel, 
Office of Supervision Policy at (202) 435-7097. If you require this 
document in an alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION: 

1. Introduction

    The student loan servicing market has shifted significantly over 
the past two and a half years. The COVID-19 pandemic led to financial 
and operational disruptions at servicers. At the same time, the Federal 
loan payment suspension brought meaningful relief to borrowers. 
Recently, several Federal contractors left the market, and, as a 
result, nine million Federal student loan accounts transferred from one 
servicer to another. Additionally, the Department of Education (ED) 
introduced specific programs to broaden access to public service loan 
forgiveness and forgiveness through income-driven repayment. Post-
secondary schools, such as for-profit colleges, continued to offer 
institutional loans that pose particular risks to consumers. During 
this period, the CFPB engaged in vigorous oversight of the consumer 
protections set forth in the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Consumer Financial Protection Act), in coordination 
with ED and State regulators.
    In light of these developments, this Supervisory Highlights Special 
Edition focuses on three sets of significant supervisory findings. 
First, Supervision initiated work at certain institutional lenders and 
found that blanket policies to withhold transcripts in connection with 
an extension of credit are abusive under the Consumer Financial 
Protection Act. Second, Supervision engaged in oversight of major 
Federal loan transfers and identified certain

[[Page 61295]]

consumer risks related to those transfers. Third, Supervision 
identified a considerable number of violations of Federal consumer 
financial law by student loan servicers in administering Public Service 
Loan Forgiveness (PSLF), Income-Driven Repayment (IDR), and Teacher 
Loan Forgiveness (TLF).
    Supervision found that servicers regularly provide inaccurate 
information and deny payment relief to which borrowers are entitled. ED 
is addressing some of these risks through program changes like the PSLF 
and IDR program waivers, as well as improved vendor oversight. The 
extensions to the COVID-19 payment pause for federally owned loans also 
has given ED some breathing room to implement these changes. However, 
the findings documented in this report impact servicers' entire 
portfolios, including commercially owned Federal Family Education Loan 
Program (FFELP) loans, and CFPB encourages servicers to address the 
issues across their portfolios.

1.1 Private Student Loans

    Private student loans are extensions of credit made to students or 
parents to fund undergraduate, graduate, and other forms of 
postsecondary education that are not made by ED pursuant to title IV of 
the Higher Education Act (title IV). Banks, non-profits, nonbanks, 
credit unions, state-affiliated organizations, institutions of higher 
education, and other private entities hold an estimated $128 billion in 
these student loans, as reported to the national consumer reporting 
companies. Private student loans include traditional in-school loans, 
tuition payment plans, income share agreements, and loans used to 
refinance existing Federal or private student loans.\1\
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    \1\ Recently, institutions and other private actors started 
offering new private student loan products branded as ``income share 
agreements'' (ISAs). At least several dozen postsecondary 
institutions directly offer income share agreements (ISAs), which 
require consumers to pledge a given percentage of their incomes over 
a specified period. The repayment process for ISAs may result in 
consumers realizing very large APRs or prepayment penalties that may 
be illegal under the Truth In Lending Act or State usury caps.
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    The private student loan market is highly concentrated--the five 
largest private education loan providers make up over half of 
outstanding volume. For the most recent academic year, consumers took 
out $12.2 billion in-school private education loans, which reflects a 
15 percent year over year reduction from 2019-20, driven by recent 
enrollment declines. Additionally, industry sources estimate 
refinancing activity in calendar year 2021 at $18 billion; demand for 
private refinancing appears to have declined significantly because of 
the pause in Federal student loan repayment and the recent rise in 
interest rates.\2\
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    \2\ Navient, July 2022 investor presentation, https://navient.com/Images/SFVegas-2022-Investor-Presentation_tcm5-25984.pdf, at 7.
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    Postsecondary institutions sometimes provide loans directly to 
their students; this practice is known as institutional lending.\3\ 
Aggregate data on institutional lending are limited. Underwriting 
requirements and pricing of institutional loans vary widely, ranging 
from low-interest rate, subsidized loans that do not require co-signers 
to unsubsidized loans that accrue interest during and after the 
student's enrollment and do require borrowers to meet underwriting 
standards or obtain qualified co-signers. At the same time, many 
institutions also extend credit for postsecondary education through 
products like deferred tuition or tuition payment plans. Student loans 
and tuition billing plans may be managed by the institutions themselves 
or by a third-party service provider that specializes in institutional 
lending and financial management. Supervisory observations suggest that 
some institutional credit programs have delinquency rates greater than 
50 percent.
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    \3\ This category does not include Perkins loans, which were 
issued by schools but largely funded by title IV Federal funds 
distributed to schools.
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    Additionally, students may withdraw from their classes before 
completing 60 percent of the term, triggering the return of a prorated 
share of title IV funds to Federal Student Aid (FSA), known as ``return 
requirements.'' Institutions of higher education often charge tuition 
even where students do not complete 60 percent of the term. When a 
student withdraws from classes without completing 60 percent of the 
term, the institution often refunds the title IV funds directly to FSA 
and, in turn, bills students for some or all of the amount refunded to 
FSA, since the school is maintaining its tuition charge for the 
classes. Institutions handle these debts in a variety of ways, but many 
offer payment plans and other forms of credit to facilitate repayment. 
In aggregate, these debts, called ``Title IV returns,'' can total 
millions of dollars. Supervisory observations indicate that some of 
these repayment plans can include terms requiring repayment for more 
than four years.

1.2 Federal Student Loans

    ED dominates the student loan market, owning $1.48 trillion in debt 
comprising 84.5 percent of the total market, and it guarantees an 
additional $143 billion of FFELP and Perkins loans. All told, loans 
authorized by title IV of the Higher Education Act account for 93 
percent of outstanding student loan balances.\4\
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    \4\ See https://www.newyorkfed.org/microeconomics/hhdc/background.html, and https://www.newyorkfed.org/microeconomics/topics/student-debt.
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    The Federal student loan portfolio has more than tripled in size 
since 2007, reflecting rising higher education costs, increased annual 
and aggregate borrowing limits, and increased use of Parent and Grad 
PLUS loans. Annual Grad PLUS origination volume has more than 
quadrupled in that time, expanding from $2.1 billion to an estimated 
$11.6 billion during the 2020-21 academic year.\5\ Before the COVID-19 
pandemic, Parent PLUS volume peaked at $12.8 billion (in current 
dollars) in loans originated in the 2018-2019 academic year. Combined, 
these products accounted for 26 percent of all title IV originations in 
the most recent academic year.
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    \5\ In comparison, annual student borrowing under the subsidized 
and unsubsidized Stafford loan program rose from $49.4B in 2006-07 
to a peak of $87.8B in AY2010-11 before beginning a downward trend 
that tracked with falling undergraduate enrollment that was 
exacerbated by the COVID pandemic. Stafford originations in AY2020-
21 totaled $62.1B, down more than 29 percent from AY2010-11.
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    Federal student loans suffer high default rates. As of March 2022, 
approximately $171 billion in outstanding title IV loans were in 
default. This represents nearly 11 percent of outstanding balances but 
19 percent of Federal student loan borrowers--a figure that would 
surely be higher but for the federally owned loan payment suspension. 
Federal ownership and management of more than four-fifths of 
outstanding student loans enabled the government, at the outset of the 
pandemic in March 2020, to directly assist more than 40 million 
borrowers through the CARES Act and a series of executive orders.
    Servicers are responsible for processing a range of different 
payment relief applications or requests including PSLF, TLF, and IDR, 
as well as payment pauses including deferment and forbearance. The 
volume of these applications changes significantly over time based on 
servicer account volume and external events such as the expected return 
to repayment following COVID-19 related forbearance. To illustrate 
these trends, Figure 1 shows the total incoming IDR applications and 
processed applications from October 2021 through July 2022 at one 
servicer.\6\

[[Page 61296]]

For example, in December 2021, many borrowers expected to start 
repaying their loans imminently and thus submitted IDR applications. In 
light of the intermittent increases in application volume, servicers 
frequently did not respond timely to borrowers' applications. 
Additionally, at any given time, servicers may have a meaningful number 
of unprocessed applications because they wait to process the 
recertifications until closer in time to the recertification due date.
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    \6\ Examiners collected these data in 2021 and 2022.
    [GRAPHIC] [TIFF OMITTED] TN11OC22.001
    
    ED contracts with several companies to service Direct and ED-owned 
FFELP loans. When one of these companies decides to stop servicing 
loans, the accounts are transferred to another contractor. As shown in 
Figure 2, the recent departures of Granite State and PHEAA/FedLoan 
Servicing resulted in the transfer of millions of borrower accounts 
among the remaining Federal loan servicers.\7\
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    \7\ FSA provided these data and authorized publication here.
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    Where a borrower's data has become lost or corrupted as a result of 
poor data management by a particular servicer, subsequent transfers may 
result in servicers sending inaccurate periodic statements, borrowers 
losing progress toward forgiveness, and borrowers having difficulty in 
rectifying past billing errors.\8\ To prepare consumers for the 
transfers, the CFPB published specific information for consumers, 
including advising them to remain vigilant toward potential scams at a 
time when they are particularly vulnerable.\9\
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    \8\ See generally Conduent Education Services, LLC (consent 
order), Administrative Proceeding (File No. 2019-BCFP-0005), Bureau 
of Consumer Financial Protection.
    \9\ https://www.consumerfinance.gov/about-us/blog/student-loans-transferring-to-new-servicer-learn-what-this-means-for-you/.

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[[Page 61297]]

[GRAPHIC] [TIFF OMITTED] TN11OC22.002

2. Institutional Lending

    Earlier this year, the CFPB announced it would begin examining the 
operations of institutional lenders, such as for-profit colleges, that 
extend private loans directly to students.\10\ The lenders have not 
historically been subject to the same servicing and origination 
oversight as traditional lenders. Considering these risks, the Bureau 
is examining these entities for compliance with federal consumer 
financial laws.
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    \10\ Consumer Financial Protection Bureau to Examine Colleges' 
In-House Lending Practices, https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-to-examine-colleges-in-house-lending-practices/.
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2.1 Examination Process

    Simultaneously with issuing this edition of Supervisory Highlights, 
the Bureau has updated its Education Loan Examination Procedures. The 
Consumer Financial Protection Act provides the Bureau with authority to 
supervise nonbanks that offer or provide private education loans, 
including institutions of higher education.\11\ To determine which 
institutions are subject to this authority, the Consumer Financial 
Protection Act specifies that the Bureau may examine entities that 
offer or provide private education loans, as defined in section 140 of 
the Truth in Lending Act (TILA), 15 U.S.C. 1650. Notably, this 
definition is different than the definition used in Regulation Z. 
However, a previous version of the Bureau's Education Loan Examination 
Procedures referenced the Regulation Z definition. The new version has 
now been updated to tell examiners that the Bureau will use TILA's 
statutory definition of private education loan for the purposes of 
exercising the Consumer Financial Protection Act's grant of supervisory 
authority.\12\ The new exam manual thus instructs examiners that the 
Bureau may exercise its supervisory authority over an institution that 
extends credit expressly for postsecondary educational expenses so long 
as that credit is not made, insured, or guaranteed under title IV of 
the Higher Education Act of 1965, and is not an open-ended consumer 
credit plan, or secured by real property or a dwelling.\13\
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    \11\ 12 U.S.C. 5514 (a)(1)(D).
    \12\ https://www.consumerfinance.gov/compliance/supervision-examinations/education-loan-examination-procedures/.
    \13\ This definition does not include Regulation Z's exceptions 
for tuition payment plans or very short-term credit. Thus, 
institutions may offer private education loans that make them 
subject to the Bureau's supervisory authority even if Regulation Z 
exempts them from disclosure requirements.
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    Compliance Tip: Schools should evaluate the financial services they 
offer or provide and ensure they comply with all appropriate consumer 
financial laws.
    The Education Loan Examination Procedures guides examiners when 
reviewing institutional loans by identifying a range of important 
topics including the relationship between loan servicing or collections 
and transcript withholding.
    Where higher education institutions extend credit, the dual role of 
lender and educator provides institutions with a range of available 
collection tactics that leverage their unique relationship with 
students. For example, some postsecondary institutions withhold 
official transcripts as a collection tactic. Institutions often 
withhold transcripts from their students who are delinquent on debt 
owed to the institution, while also requiring new students to provide 
official transcripts from schools they previously attended. 
Collectively, this industry practice creates a circumstance in which a 
formal official transcript is necessary for students to move from one 
school to another, creating a powerful mechanism to enforce payment 
demands even when consumers seek to attend a competitor school. 
Consumers who cannot obtain an official transcript could be locked out 
of future higher education and certain job opportunities.

2.2 Transcript Withholding Findings

    Examiners found that institutions engaged in abusive acts or 
practices by withholding official transcripts as a blanket policy in 
conjunction with the extension of credit. These schools did not release 
official transcripts to consumers that were delinquent or in default on 
their debts to the school that arose from extensions of credit. For 
borrowers in default, one institution refused to release official 
transcripts even after consumers entered new payment agreements; 
rather, the institution waited until consumers paid their entire 
balances in full. In some cases, the institution collected payments

[[Page 61298]]

for transcripts but did not deliver those transcripts if the consumer 
was delinquent on a debt.
    An act or practice is abusive if it, among other things, takes 
unreasonable advantage of the inability of a consumer to protect the 
interests of the consumer in selecting or using a consumer financial 
product or service. Examiners found that institutions took unreasonable 
advantage of the critical importance of official transcripts and 
institutions' relationship with consumers. Since many students will 
need official transcripts at some point to pursue employment or future 
higher education opportunities, the consequences of withheld 
transcripts are often disproportionate to the underlying debt amount. 
Additionally, faced with the choice between paying a specific debt and 
the unknown loss associated with long-term career opportunities of a 
new job or further education, consumers may be coerced into making 
payments on debts that are inaccurately calculated, improperly 
assessed, or otherwise problematic.
    This heightened pressure to produce transcripts leaves consumers 
with little-to-no bargaining power while academic achievement and 
professional advancements depend on the actions of a single academic 
institution. Other consumers might simply abandon their future higher 
education plans when faced with a transcript hold. At the same time, 
the institution does not receive any intrinsic value from withholding 
transcripts. Unlike traditional collateral, transcripts cannot be 
resold or auctioned to other buyers if the original debtor defaults.
    Consumers do not have a reasonable opportunity to protect 
themselves in these circumstances. Since most institutional debt is 
incurred after consumers have already selected their schools, they may 
be practically limited to a single credit source. After consumers 
select their schools, those schools have a monopoly over the access to 
an official transcript. At the point where consumers need a transcript, 
they cannot simply select a different school to provide it. For these 
reasons, Supervision determined that blanket policies to withhold 
transcripts in connection with an extension of credit are abusive under 
the Consumer Financial Protection Act and directed institutional 
lenders to cease this practice.

3. Supervision of Federal Student Loan Transfers

    In July of 2021, PHEAA and Granite State announced they were ending 
their contracts with FSA for student loan servicing, triggering the 
transfer of more than nine million borrower accounts.\14\ The Bureau 
reviewed the transfers of one or more transferee and transferor 
servicers, with a focus on assessing risks and communicating these 
risks to supervised entities promptly so that they could address the 
risks and prevent consumer harm. The Bureau coordinated closely with 
FSA and State partners as they also conducted close oversight of the 
loan transfers.
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    \14\ https://www.pheaa.org/documents/press-releases/ph/070721.pdf; https://nhheaf.org/pdfs/press/2021/NHHEAF_Network_Public_Announcement_07-19-21.pdf. The total volume of 
transfers between entities is 14 million borrower accounts, but the 
transfer from Navient to Maximus of five million accounts did not 
involve borrower accounts moving to a new servicing platform.
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3.1 Supervisory Approach

    The Bureau's supervisory approach included three components: pre-
transfer monitoring and engagement, real-time transaction testing 
during the transfers, and post-transfer review and analysis. Throughout 
this process the Bureau worked closely with ED's primary office 
handling student loans, Federal Student Aid (FSA), and State 
supervisors including the California Department of Financial Protection 
and Innovation, Colorado Attorney General's Office, Connecticut 
Department of Banking, Illinois Department of Financial and 
Professional Regulation, Washington Department of Financial 
Institutions, and Massachusetts Division of Banks. This coordination 
significantly improved oversight.
    Pre-transfer monitoring and engagement included an evaluation of 
transfer-related policies and procedures in accordance with the 
Education Loan Examination Procedures, coordination between the Bureau 
and FSA in issue and risk identification, and direct engagement between 
Supervision leadership and specific servicers.
    A significant aspect of the oversight involved transaction testing 
sampled accounts on both ends of the transfer. Within these samples, 
examiners identified discrepancies between relevant servicers' data and 
requested clarification to determine whether they represented transfer 
errors or other consumer risks. Subsequently, the Bureau reviewed these 
data to identify systemic risks to consumers from the transfers and 
root causes of the identified discrepancies. Through this process, the 
Bureau provided rapid feedback to servicers and is closely coordinating 
with FSA to improve consumer outcomes and drive toward timely solutions 
to any errors.
    Overall, the near real-time supervision of a portfolio transfer 
alongside FSA and State regulators was a novel approach. Many of the 
findings detailed below were resolved, and the corrections help to 
prevent the type of long-term consumer harm seen in prior transfers.

3.2 Findings

    Based on the work described above, examiners issued interim 
supervisory communications to certain entities documenting consumer 
risks and directing them to take action to address those risks. Notable 
findings include:
     Many servicers reported that the initial set of 
information they received during the transfer was insufficient to 
accurately service loans. In some cases, important account information 
was missing or provided in an unusable format. For example, examiners 
identified inaccurate information about certain consumers' monthly 
payment amounts, due dates, and payment plans. The root cause of many 
of these discrepancies was one servicer's failure to include current 
repayment schedules--data showing future expected monthly payments 
based on consumers' repayment plans--for many accounts in the transfer. 
This error occurred for hundreds of thousands of accounts.
     Transferee and transferor servicers reported different 
numbers of total payments that count toward IDR forgiveness for some 
consumers.
     One servicer sent statements to more than 500,000 
consumers that presented inaccurate information about the borrower's 
next due date and, separately, the date Federal student loans were set 
to return to repayment.
     One servicer placed certain accounts into transfer-related 
forbearances following the transfer, instead of the more advantageous 
CARES Act forbearances.
     Multiple servicers experienced significant operational 
challenges in managing the transfers at the same time they were 
implementing major program changes. The payment pauses and extensions, 
PSLF waiver, and transfers drove increased call volume and applications 
for payment relief. Some servicers were inadequately staffed, making 
them unable to effectively manage this volume. As shown in Figure 3, 
call wait times and average processing time for payment relief 
increased significantly.

[[Page 61299]]

[GRAPHIC] [TIFF OMITTED] TN11OC22.003

     Some accounts transferred with inaccurate capitalization 
or paid ahead status. These errors caused the transferee servicer to 
misrepresent consumers' payment amounts or due dates.
    Critically, the ongoing payment pause provides servicers and FSA 
with more time to correct transfer-related errors by making manual 
account adjustments, transferring supplemental account information, and 
correcting previous inaccurate or misleading statements.
    Compliance Tip: Prior to a transfer, institutions should engage in 
robust data mapping exercises that include test transfers to minimize 
errors.
    Supervision issued Matters Requiring Attention (MRAs) across 
student loan servicers in a series of interim supervisory 
communications directing them to act before the transfers concluded to 
correct many of the issues discussed above.\15\ Servicers are currently 
working to resolve these issues. Supervision issued MRAs directing 
servicers to:
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    \15\ Supervision issues MRAs to supervised entities that direct 
the entities to take certain steps to address violations or 
compliance weaknesses and provide written updates on their progress 
to the Bureau.
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     Update their systems with accurate repayment schedules and 
other missing information;
     Correct misrepresentations on their websites and provide 
disclaimers where they did not have complete and accurate account 
details;
     Correct the type of forbearance applied to transferred 
accounts, ensuring that CARES Act forbearances are applied rather than 
less-advantageous transfer-related forbearances for the relevant 
period;
     Correct credit reporting errors;
     Improve their own internal due diligence through 
additional audits focused on critical date elements;
     Improve transfer-related training for call center 
representatives; and
     Develop and implement staffing plans to address 
operational challenges.
    In addition, supervisory personnel coordinated closely with Federal 
Student Aid to ensure that both agencies benefit from the Bureau's 
work. The Bureau worked to verify compliance with these MRAs while FSA 
directed complementary corrective action and tracked progress towards 
the resolution of systematic errors such as the failure of one servicer 
to provide repayment schedules in its initial data transfer. In some 
cases, FSA's programmatic and contractual tools were brought to bear on 
complex issues that did not originate with the transfers. For example, 
the discrepancies revealed in IDR payment counting were not caused by 
the transfer itself. Rather, oversight of the transfer process revealed 
a range of operational differences and data weaknesses that predated 
the transfer. The recently announced IDR waiver may address many of 
these issues by standardizing the way periods of eligibility are 
counted and expanding the repayment, forbearance, and deferment periods 
considered as eligible payments toward IDR forgiveness. In this way, 
FSA aims to ensure that all consumers receive the full benefits to 
which they are entitled, regardless of the servicer or transfer status. 
It will also provide remediation to address certain prior 
misrepresentations through broadened eligibility.

4. Recent Exam Findings

    The Bureau has supervised student loan servicers, including 
servicers responsible for handling Direct and other ED-owned loans, 
since it finalized the student loan servicing larger participant rule 
in 2014.\16\ In many instances, examiners have identified servicers 
that have failed to provide access to payment relief programs to which 
students are entitled. Examiners identified these issues in both the 
Direct Loan and Commercial FFELP portfolios; in most cases the conduct 
constitutes the same unfair, deceptive, or abusive act or practice 
regardless of what entity holds the loan. The Bureau shared these 
findings with FSA at the time of the examinations, and in many cases 
FSA's subsequent programmatic changes including the PSLF and IDR 
waivers provide meaningful remediation to injured consumers.
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    \16\ For a period of time beginning in 2017, servicers did not 
provide information to the CFPB at ED's direction. Recently, 
coordination with ED/FSA increased significantly, including entering 
into appropriate confidentiality agreements. The findings documented 
below come from the first three exams completed after the Bureau 
resumed unrestricted oversight of federally owned student loans in 
2020.
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4.1 Teacher Loan Forgiveness

    Certain Federal student loan consumers are eligible for TLF after 
teaching full-time for five consecutive academic years in an elementary 
school, secondary school, or educational service agency that serves 
low-income families. Consumers apply by submitting their

[[Page 61300]]

TLF applications to their servicers. These applications can be time 
consuming as they require consumers to solicit their schools' chief 
administrative officers to complete and sign a portion of the 
application. Servicers are responsible for processing these 
applications and sending applications that meet the eligibility 
criteria to FSA or the loan guarantor for final approval. In that 
process, servicers are responsible for, among other things, ensuring 
applications are complete, determining whether the consumer worked for 
the required period, and verifying that borrowers' employers are 
qualifying schools by cross matching the name of the employer provided 
against the Teacher Cancellation Low Income (TCLI) Directory.
4.1.1 Unfair and Abusive Practices in Connection With Teacher Loan 
Forgiveness Application Denials
    Examiners found that servicers engaged in unfair acts or practices 
when they wrongfully denied TLF applications in three circumstances: 
(1) where consumers had already completed five years of teaching, (2) 
where the school was a qualifying school on the TCLI list, or (3) when 
the consumer formatted specific dates as MM-DD-YY instead of MM-DD-
YYYY, despite meeting all other eligibility requirements.\17\
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    \17\ If a supervisory matter is referred to the Office of 
Enforcement, Enforcement may cite additional violations based on 
these facts or uncover additional information that could impact the 
conclusion as to what violations may exist.
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    These wrongful denials resulted in substantial injury to consumers 
because they either lost their loan forgiveness or had their loan 
forgiveness delayed. Consumers who are wrongfully denied may understand 
that they are not eligible for TLF and refrain from resubmitting their 
TLF applications. Consumers could not reasonably avoid the injury 
because the servicer controlled the application process. Finally, the 
injury was not outweighed by countervailing benefits to consumers or 
competition.
    An act or practice is abusive when a covered person takes 
unreasonable advantage of reasonable reliance by the consumer on a 
covered person to act in the interests of the consumer. A servicer also 
engaged in an abusive act or practice by denying TLF applications where 
consumers used a MM-DD-YY format for their employment dates, 
particularly where FSA had previously identified one such denial, 
directed the servicer to reconsider the application, and suggested the 
servicer refrain from date format denials going forward. The denial of 
forgiveness was detrimental to consumers, as described above. And the 
servicer may benefit from the conduct because servicers are paid 
monthly and denying forgiveness may prolong the life of the loan, 
generating additional revenue for the servicer.
    Consumers reasonably rely on servicers to act in their interests, 
and this servicer encouraged consumers to consult with their 
representatives to assist in managing their accounts, including on its 
websites where it provided information about TLF. Further, it was 
reasonable for consumers who are applying for TLF to rely on their 
servicer to act in the consumers' best interests because processing 
forgiveness applications is a core function for student loan servicers, 
and they are entirely in control of their evaluation policies and 
procedures.
    In response to these violations, examiners directed the servicer to 
review all TLF applications denied since 2014 to identify improperly 
denied applications and remediate harmed consumers to ensure they 
receive the full benefit to which they were entitled, including any 
refunds for excess payments or accrued interest.
    Compliance Tip: Servicers should routinely approve applications for 
payment relief when they have all the required information to make 
decisions, even if that information is provided in a nonstandard format 
or across multiple communications.

4.2 Public Service Loan Forgiveness

    The PSLF program allows borrowers with eligible Direct Loans who 
(i) work for qualifying employers in government or public service 
fields, (ii) make 120 on-time monthly qualifying payments, (iii) while 
in a qualified repayment plan, to have the remainder of their loans 
forgiven. Congress recognized in 2007 that the ``staggering debt 
burdens'' of higher education were driving students away from public 
service.\18\
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    \18\ E.g., 153 Cong. Rec. S9595 (daily ed. July 19, 2007) 
(statement of Senator Leahy) (``Because tuition has increased well 
beyond the rate of student assistance, students today are graduating 
with staggering debt burdens. With the weight of this debt on their 
backs, recent college graduates understandably gravitate toward 
higher paying jobs that allow them to pay back their loans. 
Unfortunately, all too often these jobs are not in the arena of 
public service or areas that serve the vital public interests of our 
communities and of our country. We need to be doing more to support 
graduates who want to enter public service, be it as a childcare 
provider, a doctor or nurse in the public health field, or a police 
officer or other type of first responder.'').
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    By 2018, Congress came to understand that many consumers working in 
public service would never receive PSLF benefits due the complexities 
of higher education finance and eligibility requirements. At that time, 
the PSLF program had discharged loans for only 338 consumers despite 
receiving 65,500 applications.\19\ At a minimum, many applicants had a 
fundamental misunderstanding about the program terms. In response, 
Congress authorized additional funding to extend the PSLF benefits to 
Direct Loan borrowers who would be eligible but for repaying under a 
non-qualifying repayment plan like the Extended or Graduated repayment 
plans. The Temporary Expanded PSLF (TEPSLF) allowed these consumers 
that meet certain additional requirements in their last year of 
repayment to have the balance of their loans forgiven.
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    \19\ FSA Public Service Loan Forgiveness Data, https://studentaid.gov/data-center/student/loan-forgiveness/pslf-data.
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    Over the following three years, PSLF and TEPSLF canceled debts for 
10,354 and 3,480 consumers, respectively.\20\ However, these successful 
applications continued to be the exception, as more than half a million 
applications were rejected, including 409,000 from borrowers who had 
not been in repayment on a Direct Loan for 120 months. These data are 
explained in part by material misrepresentations by FFELP servicers 
about critical PSLF terms and application processes.\21\
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    \20\ See FSA November 2021 Public Service Loan Forgiveness Data, 
https://studentaid.gov/data-center/student/loan-forgiveness/pslf-data.
    \21\ Supervisory Highlights, Issue 24, Summer 2021. Consent 
Order, EdFinancial Services, LLC, 2022-CFPB-0001 (Consumer Financial 
Protection Bureau March 30, 2022).
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    In an effort to make the PSLF program ``live up to its promise,'' 
ED announced a PSLF waiver in October 2021.\22\ The waiver 
significantly changed what periods of repayment were considered 
eligible and opened a pathway for FFELP borrowers to receive credit 
toward forgiveness for the first time, if those borrowers consolidate 
into Direct Loans by October 31, 2022, providing the potential for 
cancelation for nearly 165,000 borrowers with a total balance of $10.0 
billion. In an effort to help identify and address servicing errors, ED 
announced that it would also review denied PSLF applications for errors 
and give borrowers the ability to have their PSLF determinations 
reconsidered.
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    \22\ Press release, U.S. Department of Education Announces 
Transformational Changes to the Public Service Loan Forgiveness 
Program, Will Put Over 550,000 Public Service Workers Closer to Loan 
Forgiveness (October 6, 2021), https://www.ed.gov/news/press-releases/us-department-education-announces-transformational-changes-public-service-loan-forgiveness-program-will-put-over-550000-public-service-workers-closer-loan-forgiveness.

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[[Page 61301]]

    Starting in March 2020, the CARES Act provided additional relief 
for consumers. During the CARES Act payment suspension and subsequent 
extensions, consumers are not required to make any payments and can 
request a refund for any payments they did make. These protections were 
included in subsequent extensions of the repayment pause. Importantly, 
regardless of whether a consumers paid anything, all months during this 
time will count toward PSLF and other forgiveness programs.
    During the periods covered by this report, borrowers submitted two 
kinds of PSLF forms: Employer Certification Forms (ECFs) and PSLF 
applications. ECFs certify that borrowers worked for qualifying 
employers for a specified period, while PSLF applications document 
their current qualifying employment and request forgiveness of the 
loans when they have reached 120 qualifying payments. A combined PSLF 
form was made available in November 2020 for both PSLF applications and 
ECFs.\23\
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    \23\ See https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2020-10-28/changes-public-service-loan-forgiveness-pslf-program-and-new-single-pslf-form.https://www.pheaa.org/documents/press-releases/ph/070721.pdf.
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4.2.1 Unfair Practice of Providing Erroneous Initial PSLF Eligibility 
Determinations, Qualified Payment Counts, and Estimated Eligibility 
Dates
    Results of ECFs and PSLF applications are communicated to consumers 
through letters telling consumers whether the form was approved or 
denied and including counts of consumers' total qualifying payments 
(QPs) and estimated eligibility dates (EEDs) for reaching the 120 
payments required for forgiveness. Examiners identified both wrongful 
denials and approvals of applications or ECFs. In many cases, the 
servicer corrected these errors months later, after the consumer 
complained or the servicer identified the issue. In the sample 
reviewed, examiners found that the servicer wrongfully approved ECFs 
where the borrowers had ineligible employment or had loans that were 
otherwise ineligible. This representation could lead consumers to 
falsely believe they are accruing credit toward forgiveness and delay 
taking steps like loan consolidation that could actually make them 
eligible. Other ECFs were wrongfully denied when representatives 
erroneously determined the forms had invalid employment dates, were 
missing an employer EIN, or were otherwise incomplete--when in fact 
they were not.
    Examiners also found that a servicer engaged in an unfair act or 
practice by miscalculating consumers' total QPs or EEDs and then 
communicating that erroneous information to consumers pursuing PSLF. 
Examiners' sample suggests these errors were common with many consumers 
receiving multiple incorrect QP or EED determinations across multiple 
ECF submissions.
    Wrongful approvals and denials and incorrect PSLF eligibility 
information resulted in a substantial injury because the availability 
of PSLF can substantially impact borrowers' careers, financial 
situation, and life choices. Depending on the circumstances, consumers 
may have committed to additional work with their employers for these 
months, instead of pursuing other opportunities; made other major 
financial decisions, such as financing the purchase of a residence or 
automobile; or delayed consolidation of their FFELP loans. The injury 
is not reasonably avoidable because borrowers have no choice among 
student loan servicers, no way to ensure the servicer properly 
processed these forms and were often not aware of the processing 
errors. Finally, the injury was not outweighed by countervailing 
benefits to consumers or competition because there is no direct benefit 
to consumers or competition created by improper approvals or denials.
4.2.2 Deceptive Practice of Misleading Borrowers About Student Loan 
Covid-19 Payment Suspension Refunds and PSLF Forgiveness
    Despite the PSLF-related benefits of the CARES Act payment 
suspension, some consumers seeking PSLF continued to make payments on 
their student loans during the suspension. Examiners found that at 
least one servicer engaged in a deceptive act or practice by implicitly 
representing to these consumers that they must make payments during the 
COVID-19 payment suspension for those months to be eligible for PSLF. 
During the suspension, consumers received standard PSLF communications 
including denials that informed them that qualifying payments are ones 
made under specific repayment programs--known as REPAYE, PAYE, IBR, and 
ICR. Other letters informed consumers that the estimated eligibility 
date is based on making ``on-time, qualifying payments every month'' 
when in fact no monthly payments were required for the period of the 
payment suspension. Taken together, these communications created the 
implicit representation that consumers' payments made between March 
2020 and the effective date of forgiveness were necessary for PSLF when 
in fact they were not.
    Hundreds of consumers faced this situation, and in the first year 
of the payment suspension approximately eight percent of all consumers 
that earned PSLF forgiveness had made payments during the payment 
suspension but did not receive a refund of those payments upon 
achieving forgiveness. Consumers rely on servicers to provide accurate 
information about forgiveness programs, so they reasonably believed 
that those payments were necessary. These representations were material 
because if consumers knew these payments were refundable, they likely 
would have requested a refund as those payments were unnecessary for 
achieving PSLF.
4.2.3 Unfair Practice of Excessive Delays in Processing PSLF Forms
    Examiners found that at least one servicer engaged in an unfair act 
or practice when it excessively delayed processing PSLF forms. In some 
cases, these delays lasted nearly a year. These delays could change 
borrowers' decisions about consolidation, repayment plan enrollment, or 
even employment opportunities. For example, when FFELP loan borrowers 
apply for PSLF, they are denied because those loans are ineligible, but 
they are told that a consolidation could make the loan eligible. 
Therefore, a delay in processing the PSLF form could cause consumers to 
delay consolidation and delay their ultimate forgiveness date.\24\ In 
addition, examiners observed that some borrowers spent unnecessary time 
contacting their servicers to expedite the process or receive status 
updates when these forms were delayed. Consumers plan around their debt 
obligations, and excessive delays can alter consumers' major financial 
decisions and cause substantial injury that is not reasonably avoidable 
and not outweighed by countervailing benefits to consumers or 
competition.
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    \24\ The PSLF waiver will provide meaningful remediation to this 
population by automatically counting periods of FFELP repayment as 
eligible if the borrower consolidates their loan by the deadline and 
submits the PSLF form for the relevant time period.
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    Compliance Tip: Servicers should regularly monitor both the average 
time for application review and outlier experiences. Delays in 
processing forms can be unfair even where they affect a subset of the 
portfolio.

[[Page 61302]]

4.2.4 Deceptive Practice of Misrepresenting PSLF Eligibility to 
Borrowers Who May Qualify for TEPSLF
    Before ED announced the PSLF waiver, examiners found that certain 
servicers engaged in deceptive acts or practices when they explicitly 
or implicitly misrepresented that borrowers were only eligible for PSLF 
if they made payments under an IDR plan, when in fact those borrowers 
may be eligible for TEPSLF. One servicer's training materials 
specifically advised representatives not to initiate a conversation 
regarding TEPSLF. Examiners identified calls where representatives told 
borrowers that there was nothing they could do to make years of 
payments under graduated or extended payment plans eligible for PSLF. 
In response to a direct question from a consumer about her nearly 12 
years of payments, one representative explained that they ``count for 
paying down your loan, but it doesn't count for PSLF.''
    This false information that borrowers could only obtain PSLF 
through qualifying payments under an IDR plan, when TEPSLF was 
available, was likely to mislead borrowers. Based on this false 
information, consumers considered other options besides PSLF like 
paying their loans down with lump sum payments. These 
misrepresentations also caused certain consumers to refrain from 
applying for IDR because they understood that they had not made any 
eligible payments while enrolled in graduated or extended plans.
4.2.5 Remediation for PSLF-Related UDAAPs
    Broadly, the PSLF violations identified relate to erroneous ECF and 
PSLF application determinations or servicers deceiving borrowers by 
providing incomplete or inaccurate information to consumers about the 
program terms. At present, the PSLF waiver can address many of the most 
significant consumer injuries by crediting certain past periods that 
were previously ineligible, assuming that consumers receive the 
benefits of the waiver as designed. In addition, Supervision directed 
the servicer to complete reviews of PSLF determinations and to identify 
consumers impacted by the violations. The servicer will audit the work 
and report on the remediation-related findings to the Bureau. Where 
consumers continue to face financial injuries from these violations, 
the servicer will provide monetary remediation. In addition, the 
servicer will notify consumers who were not otherwise updated on the 
status of their PSLF applications that certain information they 
received was incorrect, and it will provide those consumers with 
updated information.
    Compliance Tip: Entities should review Bulletin 2022-03, Servicer 
Responsibilities in Public Service Loan Forgiveness Communications, 
which details compliance expectations in light of the PSLF waiver. As 
explained in the Bulletin, ``After the PSLF Waiver closes, direct 
payments to borrowers may be the primary means of remediating relevant 
UDAAPs.''

4.3 Income-Driven Repayment

    Federal student loan borrowers are eligible for a number of 
repayment plans that base monthly payments on their income and family 
size. Over the years, the number of IDR programs has expanded, and 
today several types of IDR plans are available depending on loan type 
and student loan history. Most recently, ED implemented the Revised Pay 
As You Earn (REPAYE) for certain Direct student loan borrowers. For 
most eligible borrowers, REPAYE results in the lowest monthly payment 
of any available IDR plan.\25\ By the end of 2020, more than 12 percent 
of all Direct Loan borrowers in repayment were enrolled in REPAYE.\26\
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    \25\ Under the program's terms, consumers are generally entitled 
to make monthly payments equal to 10 percent of their discretionary 
income. After repaying for 20 years (on undergraduate loans) or 25 
years (for borrowers who received any Federal loans to finance 
graduate school), any remaining balance on the loans are forgiven.
    \26\ An additional 5 percent of consumers were enrolled in the 
Alternative repayment plan--the plan in which borrowers are placed 
in if they do not recertify their income or enroll in another 
repayment plan. https://studentaid.gov/data-center/student/portfolio.
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    Enrollment in these plans requires consumers to initially apply and 
then recertify annually to ensure payments continue to reflect 
consumers' current income and family size. Consumers supply their 
adjusted gross income (AGI) by providing their tax returns or 
alternative documentation of income (ADOI). ADOI requires consumers to 
submit paper forms and specified documentation (such as paystubs) for 
each source of taxable income. The servicer then uses this information 
to calculate the consumer's AGI and resulting IDR payment. When 
computing the IDR payment, servicers must also consider consumers' 
spouses' Federal student loan debt.\27\
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    \27\ See https://www.studentaid.gov/sa/repay-loans/understand/plans/income-driven#apply (``If you do not meet the conditions for 
documenting your income using AGI--you have not filed a Federal 
income tax return in the past two years, or the income on your most 
recent Federal income tax return is significantly different from 
your current income--you must provide alternative documentation of 
income.'').
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    Consumers might not timely recertify their IDR plans for various 
reasons including, but not limited to, they may not have understood 
that recertification was necessary, or they may have encountered 
barriers in the recertification process. Likewise, some borrowers may 
have experienced a boost in income making the standard repayment 
amounts manageable. Regardless, many consumers who fall out of an IDR 
plan seek to reenroll at some point in the future. This creates a gap 
period between IDR enrollments. Unlike other IDR plans, REPAYE requires 
consumers to submit documentation to demonstrate their income during 
the gap period before they can be approved to return. Servicers use 
this documentation to determine whether consumers paid less during the 
gap period than they would have under REPAYE. If so, servicers 
calculate catch-up payment amounts that get added to consumers' monthly 
income-derived payments.
    During the COVID-19 payment suspension, ED did not require 
consumers to recertify their incomes. Consumers' payment amounts and 
duration of IDR enrollments were essentially paused in March of 2020. 
Recently, ED authorized servicers to accept consumers' oral 
representation of their incomes over the phone for the purposes of 
calculating an IDR payment amount. ED will not require consumers that 
provide their incomes this way to provide any further documentation 
demonstrating the accuracy of that amount.
    In April 2022, ED announced it was taking steps to bring more 
borrowers closer to IDR forgiveness.\28\ ED is conducting a one-time 
payment count adjustment to count certain periods in non-IDR repayment 
plans and long-term forbearance.\29\ This waiver can help address past 
calculation inaccuracies, forbearance steering, and misrepresentations 
about the program terms. While the revision will be applied 
automatically for all Direct Loans and ED-held FFELP loans, Commercial 
FFELP loan borrowers can

[[Page 61303]]

only become eligible if they apply to consolidate their Commercial 
FFELP loans into a Direct Consolidation Loan within the waiver 
timeframe. FSA estimates the changes will result in immediate debt 
cancellation for more than 40,000 borrowers, and more than 3.6 million 
borrowers will receive at least three years of credit toward IDR 
forgiveness.\30\ The pool of borrowers who may potentially benefit from 
IDR forgiveness is large. As of March 2022, one third of Direct Loan 
borrowers in repayment were enrolled in an IDR plan.\31\
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    \28\ https://www.ed.gov/news/press-releases/department-education-announces-actions-fix-longstanding-failures-student-loan-programs.
    \29\ ED also announced that it was issuing new guidance to 
student loan servicers to ensure accurate and uniform payment 
counting, that it would track payments on a modernized data system, 
and that it would seek to display IDR payment counts on 
StudentAid.gov that borrowers could access on their own. See https://studentaid.gov/announcements-events/idr-account-adjustment.
    \30\ https://www.ed.gov/news/press-releases/department-education-announces-actions-fix-longstanding-failures-student-loan-programs.
    \31\ https://studentaid.gov/sites/default/files/fsawg/datacenter/library/DLPortfoliobyRepaymentPlan.xls.
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4.3.1 Unfair Act or Practice of Improper Processing of Income-Driven 
Repayment Requests
    Examiners found that servicers engaged in unfair acts or practices 
when they improperly processed consumers' IDR requests resulting in 
erroneous denials or inflated IDR payment amounts. Servicers made a 
variety of errors in the processing of applications: (1) erroneously 
concluding that the ADOI documentation was not sufficient,\32\ 
resulting in denials; (2) improperly considering spousal income that 
should have been excluded, resulting in denials; (3) improperly 
calculating AGI by including bonuses as part of consumers' biweekly 
income, resulting in higher IDR payments; (4) failing to consider 
consumers' spouses' student loan debt, resulting in higher IDR 
payments; and (5) failing to process an application because it would 
not result in a reduction in IDR payments, when in fact it would. These 
practices caused or likely caused substantial injury in the form of 
financial loss through higher student loan payments and the time and 
resources consumers spent addressing servicer errors. Consumers could 
not reasonably avoid the injury because they cannot ensure that their 
servicers are properly administering the IDR program and would 
reasonably expect the servicer to properly handle routine IDR 
recertification requests. The injury was not outweighed by 
countervailing benefits to consumers or competition resulting from the 
practice, as servicers should be able to process IDR requests in 
accordance with ED guidelines.
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    \32\ For example, denying an IDR application because there is no 
pay frequency listed on a paystub when in fact the paystub showed 
the frequency, or the borrower wrote the frequency on the paystub.
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4.3.2 Unfair Practice of Failing to Sufficiently Inform Consumers About 
the Need To Provide Certain Income Documentation When Reentering the 
REPAYE Payment Plan
    Consumers enroll in REPAYE by submitting a form with income 
documentation; they must recertify annually. Consumers who fail to 
recertify on time are removed from REPAYE and placed into the 
``Alternative repayment plan'' which has monthly payments that are 
generally significantly higher than those under the REPAYE plan.\33\ 
Many consumers attempt to reenroll in REPAYE creating a gap period that 
can range from one month to multiple years. Consumers who apply to 
reenroll in REPAYE must provide income documentation for the gap 
period. At one servicer, during a two-year period only 12 percent of 
applicants attempting to reenter REPAYE for the first time provided the 
required gap period income documentation. Among the 88 percent that 
were initially denied for this reason, 74 percent were delinquent six 
months later compared to only 23 percent of consumers who had been 
successfully reenrolled in REPAYE.
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    \33\ Specifically, the monthly payment under this plan is the 
fixed amount necessary to repay the loan in the lesser of 10 years 
or whatever is left on the consumer's 20- or 25-year REPAYE 
repayment period.
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    Examiners found that servicers engaged in an unfair act or practice 
when they failed to sufficiently inform consumers about the need to 
provide additional income documentation for prior gap periods when 
reentering the REPAYE repayment plan. By failing to sufficiently inform 
consumers about the need for income documentation for gap periods, 
servicers likely caused the failure of many consumers to successfully 
reenter REPAYE with their first applications because consumers were 
unaware of this requirement. This caused or was likely to cause 
substantial injury because consumers are deprived of the benefits of 
the REPAYE program (which often offers the lowest repayment amount 
among IDR plans). Consumers could not reasonably avoid the injury 
because their servicers did not inform them of the requirement to 
include income documentation during the gap period.
    Compliance Tip: Compliance officers should monitor consumer outcome 
data to identify potential unfair, deceptive, or abusive acts or 
practices. Delinquency rates and frequent denials on applications for 
payment relief may suggest the company is not meeting its obligations 
under the Consumer Financial Protection Act.
4.3.3 Deceptive Practice of Providing Inaccurate Denial Letters to 
Consumers Who Applied for IDR Recertification
    Starting in March of 2020, the CARES Act and subsequent executive 
orders suspended payments on all ED-owned student loans and temporarily 
set interest rates to zero percent. These executive orders also 
extended the ``anniversary date'' for consumers to recertify income for 
their IDR plans to after the end of the payment suspension.
    Examiners found that servicers engaged in a deceptive act or 
practice by providing consumers with a misleading denial reason after 
they submitted an IDR recertification application. Servicers told 
consumers that they were denied because the executive orders suspending 
payments had delayed their anniversary date, which made their 
applications premature. In fact, servicers denied the applications 
because the consumers' income had increased, in some cases rendering 
the consumer no longer eligible for an income-driven payment amount 
under their IDR program because their income-based payment exceeded the 
standard repayment amount.\34\ These denial letters were likely to 
mislead consumers and affect important decisions related to their 
repayment elections. For example, a consumer who knew their application 
was rejected because of an increase in income (instead of the extension 
of the anniversary date) would know to refile if their income had 
actually decreased. And even if consumers did not have a decrease in 
income, having information indicating that their IDR application was 
denied because of a payment increase would assist them in financial 
planning for future payments.
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    \34\ In other instances, the payment increased but the consumer 
was still eligible for the income-based payment plan. Servicers' 
policy was to deny applications before the anniversary date that 
resulted in increased payments.
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4.3.4 Deceptive Practice of Misrepresenting Eligibility of Parent PLUS 
Loans for Income-Driven Repayment and PSLF
    Parent PLUS loans allow parents to fund educational costs for 
dependent students. Parent PLUS loans are eligible for one IDR plan, 
ICR, if the loans are first consolidated into Direct Consolidation 
loans. Generally, to benefit from PSLF, borrowers with Parent PLUS 
Loans must consolidate their loans into Direct Consolidation loans and 
make qualifying payments under an ICR plan.

[[Page 61304]]

    Examiners found that servicers engaged in deceptive acts or 
practices when they represented to consumers with parent PLUS loans 
that they were not eligible for IDR or PSLF. In fact, parent PLUS loans 
may be eligible for IDR and PSLF if they are consolidated into a Direct 
Consolidation Loan. These representations were likely to cause 
reasonable borrowers considering IDR or PSLF for Parent PLUS loans to 
forgo taking any future steps to pursue those programs. Examiners 
directed servicers to improve policies and procedures, enhance 
training, and improve monitoring to prevent future violations.

5. Conclusion

    The Bureau will continue to supervise student loan servicers and 
lenders within its supervisory jurisdiction--regardless of the 
institution type. Supervisory Highlights can aid these entities in 
their efforts to comply with Federal consumer financial law and manage 
compliance risks. This report shares information regarding general 
supervisory findings, observations related to the recent transfer of 
millions of federally owned student loan accounts, and violations of 
the Consumer Financial Protection Act's prohibition on unfair, 
deceptive, and abusive acts or practices.
    The Bureau recommends that market participants--student loan 
servicers, originators, and loan holders--review these findings and 
implement changes within their own operations to ensure that these 
risks are thoroughly addressed. The Bureau expects institutions to 
incorporate measures to avoid these violations and similar consumer 
risks into internal monitoring and audit practices. Robust compliance 
programs seek to eliminate the problematic practices described in 
Supervisory Highlights while ensuring that consumers receive complete 
remediation for any past errors. Evidence of strong compliance programs 
that take these steps is a factor in the Bureau's risk-based 
supervision program and tool choice decisions, including decisions on 
whether or not to open follow-up enforcement investigations. The Bureau 
expects institutions to self-identify violations and compliance risks, 
proactively provide complete remediation to all affected consumers, and 
report those actions to Supervision. Regardless, where the Bureau 
identifies violations of Federal consumer financial law, it intends to 
continue to exercise all of its authorities to ensure that servicers 
and loan holders make consumers whole.

Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2022-22056 Filed 10-7-22; 8:45 am]
BILLING CODE 4810-AM-P