Email this page Print-Friendly PDF
Share
Print this page

Related Practices

Subscribe

To subscribe to receive Goodwin Procter alerts and publications click here

CFPB Issues Rule to Define “Larger Participants” of the Student Loan Servicing Market

In alignment with its recent focus on the student loan market (see January 10, 2013 Alert), the CFPB announcedproposal to include certain student loan servicers of both Federal and private student loans as "larger participants" subject to its supervision. Under the Dodd-Frank Act, the CFPB has the authority to supervise nonbank "larger participant[s] in markets for other consumer financial products or services." The CFPB has already finalized rules defining "larger participants" of the debt collection and consumer reporting markets (see November 13, 2012 Alert and July 24, 2012 Alert, respectively).

The proposal establishes a test to determine whether a nonbank entity is a "larger participant" of the student loan servicing market. An entity with an "account volume" that exceeds one (1) million will be considered a "larger participant" of the student loan servicing market. "Account volume" is the number of accounts with respect to which a nonbank entity performs student loan servicing, which includes receiving any scheduled periodic payments from a borrower, maintaining account records and communicating with the borrower on behalf of loan holders, as well as interactions with borrowers such as collection and processing of loan payments. The CFPB defines interactions with borrowers broadly to include any interaction with a borrower to facilitate receiving or making of payments or maintaining of account records, such as activities designed to help delinquent borrowers avoid or prevent default. The proposed account volume threshold would ultimately give the CFPB supervisory authority over the 7 largest student loan servicers which are responsible for approximately 71% to 94% of the activity in the student loan servicing market.

© 2014 Goodwin Procter LLP. All rights reserved. This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP, Goodwin Procter (UK) LLP or their attorneys. Prior results do not guarantee similar outcome.

Goodwin Procter LLP is a limited liability partnership which operates in the United States and has a principal law office located at 53 State Street, Boston, MA 02109. Goodwin Procter (UK) LLP is a separate limited liability partnership registered in England and Wales with registered number OC362294. Its registered office is at Tower 42, 25 Old Broad Street, London EC2N 1HQ. A list of the names of the members of Goodwin Procter (UK) LLP is available for inspection at the registered office. Goodwin Procter (UK) LLP is authorized and regulated by the Solicitors Regulation Authority.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.