The Consumer Financial Protection Bureau and Higher Education: What it means to you. March 12, 2013

Transcription

1 The Consumer Financial Protection Bureau and Higher Education: What it means to you March 12,

2 Agenda CFPB Overview CFPB & Higher Ed CFPB & Your Business Partners 2

3 Introducing the CFPB 3

4 Key Players & Relationships Management Richard Cordray, Director Raj Date, Deputy Director Rohit Chopra, Assistant Director Students Holly Petraeus, Assistant Director Servicemember Affairs Relationships Department of Education Department of Treasury Department of Justice Veterans Affairs and Department of Defense 4

5 Role and Responsibilities CFPB established to protect consumers: Conduct rule making, supervision, and enforcement for Federal consumer financial protection laws Restrict unfair, deceptive, or abusive acts or practices Take consumer complaints Promote financial education Research consumer behavior Monitor financial markets for new risks to consumers Enforce laws that outlaw discrimination and other unfair treatment in consumer finance President Obama appointed Rich Cordray to be the first Director of the CFPB in Jan

6 Role and Responsibilities Not regulators of schools, but of financial institutions Seek to arm schools with better tools to evaluate financial institutions offerings When the school is a lender Partnerships with banks High cost private loans Advocating redefinition of disclosure requirements to include TVII (HHS) loans with federal loans 6

7 Statutes Title X Consumer Finance Protection Act of 2010 creates the CFPB Dodd Frank Wall Street Reform and Consumer Protection Act of enacted 7/21/12 Dodd Frank vests primary rulemaking and enforcement to the CFPB for the following eighteen federal consumer protection laws 7

8 Statutes Alternative Mortgage Transaction Parity Act of 1982 (12 U.S.C et seq.) Consumer Leasing Act of 1976 (15 U.S.C et seq.) Electronic Fund Transfer Act (15 U.S.C et seq.) except section 920 Equal Credit Opportunity Act (15 U.S.C et seq.) Fair Credit Billing Act (15 U.S.C et seq.) Fair Credit Reporting Act (15 U.S.C et seq.) except sections 615(e) and 628 of that Act (15 U.S.C. 1681m(e), 1681w) Fair Debt Collection Practices Act (15 U.S.C et seq.) 8

9 Statutes Subsections (b) through (f) of section 43 of the Federal Deposit Insurance Act (12 U.S.C. 1831t(c) (f)) Sections 502 through 509 of the Gramm Leach Bliley Act (15 U.S.C ) except for section 505 as it applies to section 501(b) Home Mortgage Disclosure Act of 1975 (12 U.S.C et seq.) Home Owners Protection Act of 1998 (12 U.S.C et seq.) Home Ownership and Equity Protection Act of 1994 (15 U.S.C note) Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701) 9

10 Statutes Section 626 of the Omnibus Appropriations Act, 2009 (Public Law 111 8); Real Estate Settlement Procedures Act of 1974 (12 U.S.C et seq.); Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C et seq.); Truth in Lending Act (15 U.S.C et seq.); and Truth in Savings Act (12 U.S.C et seq.). 10

11 2013 Strategic Priorities Greater involvement in the private loan process Requiring school certification of ALL private loans Promote a culture of comparison shopping Financial education Research shows much of the financial literacy efforts are ineffective What is working? Servicing and collections 11

12 2013 Strategic Priorities Not a priority CFPB Examination of schools Requests for Information Section 1021 of the Dodd Frank Act charges the CFPB with collecting, researching, monitoring and publishing information about consumer financial products and services 12

13 CFPB Requests for Information Financial Products Marketed to Students Enrolled in Institutions of Higher Education Focus on campus affinity products Financial products and services that carry an endorsement (either explicit or implicit) or mark of an institution of higher education, e.g., one card student ID purchase cards; disbursement debit cards, etc. Not an investigation of any agreement or school, but a quest to understand how schools enter into these agreements Comments due on or before March 18,

14 CFPB Requests for Information Initiative to Promote Student Loan Affordability Focus on alternative repayment options for private student loan borrowers Concerns about PL debt impact on GDP growth Comments due on or before April 8,

15 CFPB & Higher Ed Resource and advocate vs. regulator Inform policy making Create tools for prospective borrowers Drive students and families to borrow less Address underutilized federal borrowing capacity 15

16 CFPB & Higher Ed 16

17 CFPB & Higher Ed 17

18 CFPB & Higher Ed 18

19 CFPB & Higher Ed 19

20 CFPB & Higher Ed 20

21 CFPB & Higher Ed 21

22 Financial Aid Shopping Sheet Estimated Cost of Attendance Grants and Scholarships Net Costs Work Options Loan Options Other Options

23 Annual Report of the CFPB Student Loan Ombudsman The CFPB received nearly 2,900 public private student loan complaints This is a relatively small number given that there are more than $150 billion in private student loans outstanding The vast majority of the complaints were related to loan servicing and loan modification issues Active duty service members and their families reported that they sometimes experience difficulty exercising their rights under the Service Members Civil Relief Act b4 Source:

24 Slide 23 b4 I recommend we try to avoid using full sentences on the slides bhoblitz, 1/23/2013

25 Servicemember Affairs Focus on Planning for Your Future & Protecting Your Finances Planning for Your Future Helping you save Dollars for degrees Protecting Your Finances Accessing your VA benefits Deployment and your credit card 24

26 Servicemember Affairs Financial Fitness Forum: September 2012 Learn about and raise awareness of unique military friendly products already being offered by financial institutions Start a dialogue between the financial services industry and the military services about how to best serve those who serve our country 25

27 Servicemember Affairs 26

28 Impacted Business Processes Private Loans Debit/Campus Cards Banking Collection Agencies

29 Private Loans Lender Requirements Statutory Regulatory Institutional Requirements TILA

30 Debit Cards Student Refunds Who issues cards Students accounts Fees Vendors and Issues

31 NACUBO s Best Practices: Debit Cards Keep Students First Encourage Students to Use Financial Institutions Offer Choices

32 NACUBO s Best Practices: Debit Cards Encourage Electronic Refunds Utilize a Competitive Process and Limit Exclusivity Engage Students in the Vendor Selection Process

33 NACUBO s Best Practices: Debit Cards Comply with Federal and State Regulations Negotiate Low or No Fee Options and Convenient Services for Students Avoid Unscrupulous Marketing Make Contracts Transparent

34 Banking Financial relationships/conditions in contracts. Impact on students/families Monopoly?

35 Collection Agencies CFPB requirements on third party debt collectors. Impact on colleges/universities. What you should look for?

36 Resources CFPB Website CFPB RFI: Alternative Repayment Options for Private Student Loan Borrowers CFPB RFI: Financial Products Marketed to Students the deal/request for informationregarding financial products marketed to students enrolled in institutions of highereducation/ Private Student Loan Report Updated 8/29/ student loans report/ Financial Aid Shopping Sheet: letter/ CFPB,_ED_Issue_Final_Version_of_Financial_Aid_Shopping_Sheet.aspx

37 Thank you for your time! Barbara Hoblitzell David Glezerman Betsy Burton-Strunk 36