It has been more than two years since the nation’s most powerful financial watchdog examined the companies that manage about $1.5 trillion of federal student loans owed by 43 million borrowers.
On Thursday, two members of the Senate Banking Committee said they’re exasperated with the Consumer Financial Protection Bureau’s continuing failure to pursue mounting problems with the way student loans are handled.
“You and your staff have provided a variety of excuses and shifting explanations for the Bureau’s failure to fulfill this critical oversight role,” Democratic Sens. Sherrod Brown and Robert Menendez wrote in a letter, obtained by NPR, to CFPB Director Kathleen Kraninger. Brown is the committee’s top Democrat.
Last fall, sources told NPR that a turf war between the Department of Education and the CFPB was effectively blocking the bureau from sending examiners into loan servicing companies to look for problems — in particular with a troubled loan forgiveness program for public service workers. The program has been rejecting 99% of people who think they have met the requirements.
In a subsequent hearing, senators cited NPR’s reporting and told director Kraninger that her agency had broad powers to conduct such oversight and could go to court to force the issue. Under Education Secretary Betsy DeVos, the Education Department has told loan servicers not to cooperate with the CFPB where federal student loans are concerned.
“You don’t have to follow her lead,” Menendez, a Democrat from New Jersey, told Kraninger, who, like DeVos, was named by President Trump.
Kraninger responded at the hearing that she would rather not have an adversarial relationship with the Department of Education. “I have met with Secretary DeVos,” she said, “and we are already discussing how to move forward in an effective way to make sure that we’re overseeing servicers.”