Today, the Consumer Financial Protection Bureau (CFPB) released the criteria it will use in examining private student loan lenders, which is an extension of the Bureau’s General Supervision and Examination Manual that will be used as a field guide by CFPB examiners to ensure that private student lenders comply with federal consumer financial laws.

Through passage of the Dodd-Frank Act, the CFPB has the authority to supervise large banks, as well as nonbanks, that make private student loans, CFPB notes that the examination procedures released today may be used to examine both types of lenders. According to the CFPB, examiners will be assessing whether student lenders have the appropriate processes in place to prevent harm to borrowers and will be looking to verify that lenders are complying with requirements of federal consumer financial law, including:

• Using accurate, nondiscriminatory advertising or marketing: Examiners will evaluate marketing and advertising materials, such as mail and text messages, telephone solicitation scripts, and agreements and disclosures for the products and services to make sure the materials are not deceptive, misleading, or discriminatory.
• Making appropriate disclosures: Examiners will assess whether the lender or service provider makes proper, clear disclosures about loan costs and terms at the time of the consumer’s application, loan approval, and loan disbursement as required under special rules for education lending.
• Providing borrowers with accurate account information: Examiners will determine if the lender or service provider, if required to do so, supplies the borrower with periodic statements that include such information as monthly payment requirements, charges, fees, and interest rate changes.
• Handling borrower inquiries and complaints: Examiners will determine if a lender or service provider has adequate and effective channels to receive customer questions and complaints.  Examiners will also evaluate the systems, procedures, and policies used by the company for tracking, handling, investigating, and resolving consumer inquiries, disputes, and complaints. 

CFPB indicates that supervision activities will include gathering reports from and conducting examinations of supervised entities. The examination process will be an ongoing process of pre-examination scoping and review of information, data analysis, onsite examinations, and regular communication with supervised entities, as well as follow-up monitoring. When necessary, examiners will coordinate and work closely with the CFPB’s enforcement staff to take appropriate enforcement actions to address harm to consumers.  

For more information, the related CFPB press release is attached. The Student Lending Examination Procedures are available here.