The Consumer Financial Protection Bureau, which starts operating on Thursday, has oversight and enforcement authority over private education loans and most private education lenders.
The Private Education Loan Ombudsman within the CFPB will respond to complaints about private education loans by students and their families and will help mediate borrower disputes with education lenders on an informal basis. Here are my recommendations to improve the private loan process.
The Private Education Loan Ombudsman should create a centralized clearinghouse for tracking complaints about private education loans. The complaints should be tracked according to type of complaint, characteristics of the loan - such as the loan amount, term and interest rates - lender and borrower and the type of college. This will allow the CFPB to identify patterns of abuse and other trends for possible enforcement actions, new regulations or other remediation.
The ombudsman should also track other data about private education loans. Currently there is very little publicly-available accurate data concerning private education loans, such as annual new loan volume, total debt outstanding and loan interest rates and fees. It would also be helpful to publish data by education level and individual college in addition to aggregate totals. This data can potentially inform public policy concerning private education loans.