NASHVILLE, Tenn.–Under the Trump administration the BCFP has stepped back its oversight of private student loan servicing, but many states are now working to fill the regulatory void, according to one attorney.
Kelly Lapinski, a regulatory compliance lawyer with McGlinchey Stafford, noted the relief many credit unions have felt in the change in administrations, after the Bureau under former director Richard Cordray “viewed education loans as a key area of focus,” even as it left the regulated unsure of how to act in many areas due to a lack of guidance. Instead, it offered only its enforcement actions and bulletins as a guide.
Under Acting Director Mick Mulvaney, said Lapinski, the Bureau has removed student loan servicing as a priority, and currently lists it as “inactive.”
“We’ve also seen some significant organizational structural changes,” noted Lapinski in remarks to CU Student Choice’s Empower U Conference here. “The Office of Students and Young Consumers folded into the Office of Financial Education. Instead of being a formidable power for change,” the office’s activities have now been characterized as “publishing pamphlets.”
“We all want predictability. We want rules codified,” said Lapinski. “The new interagency guidance basically said no, no, no, the times have changes on that topic.”
The BCFP said that no longer will a lender be found to have a violation by not complying with a bulletin, Lapinski told the meeting.
No Longer As Scary, But…
“The Bureau has taken some concrete steps to step away from rulemaking and enforcement in student lending. Arguably, they are no longer as scary,” said Lapinski. “In the absence of the federal government, we now have states that have stepped in and said ‘Don’t think things are going to be completely unregulated.’ It has mostly been blue state attorneys general saying ‘We are going to create mini-BCFPs in our states.’ Pennsylvania and New Jersey have prominently said ‘We are going to take actions.’ The states are being empowered through consumer protections. We believe they are going to be very active in their enforcement actions. A lot of this focus is around payments, how we talk about payments deferment options. This is going to be a trend that continues.”