Congressman Jeb Hensarling of Texas, whose campaign has received more than $8 million from the financial sector since 2010, has long endeavored to undercut the Consumer Financial Protection Bureau, an agency that regulates many of the businesses that keep Hensarling’s election campaigns flush with contributions. So it’s of little surprise that the lawmaker is thrilled at Education Secretary Betsy DeVos’ recent decision to stop working with the CFPB on student loans — even though the Bureau has returned hundreds of millions of dollars to screwed-over student borrowers.
Hensarling sent a letter to DeVos last week, The Hill reports, praising DeVos for her decision last month to end years of formal cooperation between the Education Dept. and CFPB in combating student loan fraud.
DeVos told the CFPB in September that her department would end agreements established in 2011 and 2013, claiming the Bureau was not living up to its end of the deals, by doing too much to hold loan servicers accountable.
The Secretary claimed the Bureau overstepped its authority by taking enforcement actions against student loan servicers and collectors, rather than simply passing those matters on to the Education Dept. to handle. She also accused the CFPB of failing to abide by its agreement to provide the Department with all complaints related to federal student loans within 10 days of receiving the grievance.
The CFPB fired back the following week, with director Richard Cordray noting in a letter [PDF] that he believes the Department’s decision to end years of formal cooperation combating student loan fraud is based on DeVos’ misunderstanding about the Bureau’s responsibilities and the actions it has taken related to student loans.
Pouring On The Praise
While Hensarling’s office did not return Consumerist’s request for a copy of the letter, The Hill reports the lawmaker called DeVos’s decision “necessary and appropriate” in the face of the CFPB’s “overreach into the education field.”
“Congress never authorized or intended the CFPB to be the regulator of educational services, yet the CFPB entered the field regardless,” Hensarling wrote, as reported by The Hill. “Sadly, it is no surprise that that this unconstitutional agency routinely exceeds the limits of its jurisdiction.”
Hensarling noted the end of the agreements was “most welcome” and that other agencies should take note.
According to the nonpartisan Center for Responsive Politics, Hensarling has regularly been a favorite recipient of contributions from banks since becoming Chair of the House Financial Services Committee after being reelected in 2012.
During the 2016 election cycle alone, his campaign took in nearly $1 million from commercial banks, securities firms, and credit companies. He’s already approaching the $500,000 mark from just these few sectors for the 2018 election.
A Differing Report
Hensarling’s letter of praise for DeVos is in direct contradiction to a recently released report that found the CFPB’s handling of consumer complaints related to student loan servicing resulted in $750 million in relief to borrowers.
According to the CFPB report [PDF] released today, since the agency began accepting student loan servicing complaints in 2012, it has received more than 50,700 private and federal student loan complaints, as well as 9,800 debt collection complaints.
“These complaints have served as the critical link in a process through which government agencies and market participants have repeatedly taken action to improve the student loan system for millions of Americans,” the report states.
The Bureau addressed these complaints with 360 companies, including student loan servicers, debt collectors, private student lenders, and companies marketing student loan “debt relief.”
The report found that relief for student loan borrowers included those harmed by illegal lending practices from for-profit colleges, restitution for military borrowers illegally denied benefits, and refunds and redress to student loan borrowers harmed by servicing failures.
An analysis of the complaints and Bureau action found that these complaints, and subsequent enforcement action, not only returned funds to borrowers, but strengthened key aspects of the student loan repayment process for others.
For instance, the CFPB notes that it received a number of complaints from borrowers that related to processing delays, surprise application denials, and lost paperwork when applying for affordable payment plans.
These complaints, the report notes, resulted in the agency working with the Dept. of Education to add stronger rogueries to ensure student loan borrowers timely, actionable information from their servicer about their application status and how to get an affordable monthly payment.
Likewise, the Bureau’s received complaints from military borrowers who were prevented from accessing their right to an interest-rate reduction under the Servicemember Civil Relief Act.
The CFPB worked with the Dept. of Education to automatically extend the interest-rate reduction to more than 100,000 servicemembers on active duty with student loans.
As a result of the policy change, the report estimates that military borrowers have saved more than an estimated $20 million in interest charges starting in 2016.
Consumerist has reached out to Hensarling’s office for comment on the CFPB’s report. We’ll update this post if we hear back.
Source: Consumer Reviews