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Publication Date

2018

Abstract

Outstanding student loan balances totaled over
$1.38 trillion as of December 31, 2017 with 11% of
student loan debt over ninety days delinquent or in
default. Due to half of all student loans being in
deferment, grace periods, or forbearance, the actual
delinquency rate is likely double the above figure.
Delinquent student borrowers enrolled in some form of
college education expect to improve their financial
position. Instead, many find themselves unable to break
even under the weight of large amounts of debt with
confusing, and often misleading, repayment plans.
Many blame the lending practices of student loan
providers and servicers for the high student loan
default rate. As the primary federal agency charged
with the regulation of consumer financial markets, the
Consumer Financial Protection Bureau ("CFPB") has
used its enforcement powers against student loan
companies that have violated federal consumer
financial law while also developing rules and suggested
practices to make the student loan market less
treacherous for indebted students. The CFPB's
regulatory and supervisory authority over consumer

financial markets places the agency in a prime position
to address the root causes of the high delinquency rate.
This note will analyze the CFPB's efforts to remedy
the student loan problem by assessing its use of
enforcement powers, its published industry rules and
guidance, and its use of other tools to promote a more
transparentand navigable student loan market. Special
attention is given to consumer relief resulting from
historical enforcement actions, the CFPB's complaint
collection and resolution process, and significant
obstacles to effective regulation of the student loan
market, including insufficient regulatory authority in
the private student loan market, uncertainty concerning
regulators' expectations of student loan companies, and
inconsistent enforcement of consumer financial law.

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