forbearance, or deferment, may help to address the impending restart of payments. This is important for a couple of reasons. First, given the potential for repayment problems, servicers should expect that a potentially large number of borrowers will be contacting servicers to discuss repayment terms, repayment programs, and other options. Servicers should review policies and procedures and prepare for a potential deluge of borrowers seeking information and assistance. Second, borrowers should ensure contact information is current and, if hardship may occur due to the upcoming payment restart, should proactively be prepared to contact their servicers for assistance, options, and, potentially, more time. CFPB Enforcement While the pause in federal student loan payments has occurred, the CFPB has actively been engaged in enforcement activity relating to student loan debt. Enacted in 2007, the Public Service Loan Forgiveness ("PSLF") program is a federal student loan forgiveness program for people devoted to careers in nonprofit and public organizations. The PSLF provides parameters for the cancellation of student loan debt if a borrower meets certain criteria relating to payments and years of service for a qualifying employer.[4] The loan program has proven complicated for borrowers to navigate, and several large student loan servicers recently left the program. Given the historical complaints about the PSLF program and the numerous current proposals on changes to the federal student loan programs and payments, it is no surprise that the CFPB has increased scrutiny of servicers regarding the PSLF program.[4] “Through its supervision of student loan servicers, the CFPB has found that servicers made deceptive statements to borrowers about their ability to become eligible for PSLF. When servicers fail to provide accurate and complete information, they mislead borrowers about their ability to benefit under PSLF, which can lead to tens of thousands of dollars in loan payments that should have been canceled.”[4] A new waiver program from the Department of Education addresses these issues. The CFPB has issued clear guidance that servicers are expected to comply with federal consumer financial protection laws while administering the new waivers. “The CFPB plans to prioritize student loan servicing oversight work in deploying its enforcement and supervision resources in the coming year with a specific focus on monitoring engagement with borrowers about PSLF and the PSLF Waiver.”[4] The CFPB is not focusing only on the servicing of student loans; it has also investigated student loan lending during the pandemic pause. In one case, the CFPB entered a consent order with a company that provided “income share agreements (ISAs) to finance postsecondary education.”[5] The companies used the ISA agreement in an attempt to circumvent disclosure requirements under Reg Z and TILA.[5] “The CFPB alleged that the financing companies misled students by characterizing ISAs as neither ‘credit’ nor ‘private education loans,’” when, in fact, the ISAs were “credit” requiring certain federal disclosures.[5] The CFPB has indicated clearly it will be focusing investigation and enforcement activity on student loans, and the servicing of student loans, for the foreseeable future. Servicers should routinely review announcements and bulletins from the CFPB on areas of focus, inquiry, or concern, then review policies and procedures to ensure compliance. For those who cannot afford to restart payments, exploring options, including income-driven repayment plans, forbearance, or deferment, may help to address the impending restart of payments. Angela L. Beblo is a Counsel attorney based in Spilman's Charleston, West Virginia office. Her primary areas of practice are consumer finance and litigation. She can be reached at 304.340.3852 or abeblo@spilmanlaw.com. 1. https://www.ed.gov/news/press-releases/biden-harris-administrationextends-student-loan-pause-through-may-1-2022 2. https://www.cnbc.com/2022/02/26/93percent-of-student-loan-borrowersarent-prepared-to-restart-payments-survey-finds.html 3. https://www.cnbc.com/2022/02/25/half-of-student-loan-borrowers-atincreased-risk-of-delinquency-gao-finds-.html 4. https://www.consumerfinance.gov/about-us/newsroom/cfpb-steps-upscrutiny-of-student-loan-servicers-who-deceive-borrowers-about-publicservice-loan-forgiveness/ 5. https://www.enforcementwatch.com/2021/09/07/cfpb-enters-into-consentorder-with-affiliated-education-financing-companies/ Pub. 13 2022 I Issue 2 Summer 17 West Virginia Banker
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