by Jeff Sovern
Rohit Chopra senior fellow at the Consumer Federation of America and formerly student loan ombudsman at the CFPB, testified last week on the Choice Act and listed a few of student loan cases that could not have been brought under the Choice Act. Here is his list:
While many know of Wells Fargo’s years-long fake accounts scandal leading to blockbuster fines in September 2016, just two months earlier the CFPB also fined Wells Fargo millions for illegal student loan practices, including allocating borrower payments in order to maximize late fees. This action would not be possible under the proposal.
In 2015, the CFPB announced that it had caught Discover, another big student lender, for illegal billing and debt collection practices, which would also not be possible under the proposal.
In 2014, the CFPB sued Corinthian Colleges for an illegal student loan scheme coupled with strong-armed debt collection tactics to shake down their students. Ultimately, the CFPB secured $480 million in debt relief for borrowers and Corinthian is no longer operating. This action would not be possible under the proposal.
And just this year, the CFPB sued student loan behemoth Navient, formerly known as Sallie Mae, for illegally cheating borrowers out of their repayment rights through shortcuts and deception at every stage of the repayment process so that it can pad its own profits. The allegations are severe, impacting millions of borrowers. This action would not be possible under the proposal, since the consumer agency would simply lack the authority to enforce critical consumer protection laws.
If the CFPB couldn't stop these schemes, who would?