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The next front? Student loan servicing and the cost to our men and women in uniform

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Today, I joined the Secretary of Defense at the Pentagon to announce a report about the servicing obstacles that servicemembers face in paying off student loan debt. The report, “The Next Front? Student Loan Servicing and the Cost to Our Men and Women in Uniform,” shows that servicemembers are having a hard time accessing the student-loan repayment protections granted to them under federal rules.

Since I began this job almost two years ago, I’ve visited over 40 different military installations – talking to senior leaders, military service providers and thousands of servicemembers and spouses. One thing I’ve heard repeatedly is that servicemembers are entering the military with – and sometimes because of –student-loan debt, and, as a result, are facing both financial challenges and paperwork challenges. And unfortunately they are not always getting the information they need from their loan servicers about programs and policies that could help them reduce that debt significantly while they’re on active duty.

We’re hearing that servicemembers are having problems getting their lenders to correctly apply their SCRA rights. They also don’t know about their repayment alternatives, and are getting inaccurate or incomplete information about their options. And they’re confused by eligibility requirements for benefits that are so complicated that they either can’t figure out what they’re entitled to or don’t realize that taking one benefit might exclude them from being eligible for another, more helpful, one.

One particular conversation with a young sailor stands out. He was just out of basic training at Naval Station Great Lakes. He told me that he entered the Navy with over $100,000 in student loan debt – and no degree! He joined the Navy because it was the only way he believed he could “make it,” but most of his Navy paycheck was going towards paying off those loans.

How he chooses to pay off his debt is not a matter of just a few dollars and cents. That young sailor could pay nearly $25,000 extra if he doesn’t receive his Servicemembers Civil Relief Act (SCRA) six-percent interest-rate cap while he’s on active duty. And if he stays in the Navy for 10 years but doesn’t know about or doesn’t use the Income-Based Repayment plan, the Public Service Loan Forgiveness program, and the SCRA rate cap, he could lose out on nearly $76,000 that he could have cut off his debt in those 10 years.

We’ll be teaming up with DoD to get the word out about military student-loan benefits and consumer protections. We’ve developed a “Guide for Servicemembers with Student Loans” with information on repayment options, as well as an FAQ section for military student loan borrowers at Ask CFPB. Servicemembers with problems in the servicing of their student loan debt can also file a complaint at consumerfinance.gov. And we want servicemembers to know that even if you didn’t ask for student loan repayment benefits when you entered active duty, it’s not too late to do it now!

Helping small businesses understand and comply with the new remittance rule

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Our goal is to make financial markets work. A crucial part of reaching that goal is making sure that honest businesses – particularly small businesses – have what they need to understand and comply with our new regulations, which are designed both to help consumers and make a fair playing field for companies that play by the rules.

Today, we’re releasing our small business compliance guide for our international electronic money transfers rule (also known as the remittance rule), which will take effect on February 7, 2013. This guide will make it easier to understand the new requirements. Although the guide is not a substitute for the rule, it highlights issues that businesses, in particular small businesses and those that work with them, should consider while implementing the new requirements.

We need your help to find areas in the guide that could be better.

How can I provide feedback?

Email comments about the guide to CFPB_RemittanceGuide@cfpb.gov. Your feedback is crucial to making sure the guide is as helpful as possible. We would love to hear your thoughts on its usefulness and readability, and about improvements you think are needed.

We would especially like to know:

1) What kind of business do you operate?
2) Generally, what is the size of your business?
3) Where are you located?
4) How useful did you find the guide for understanding the rule?
5) How useful did you find the guide for implementing the rule at your business?
6) Do you have any suggestions for making the guide better, such as additional implementation tips?

What are some other compliance resources?

We are working on a number of projects to help industry understand and comply with the new requirements, including:

Questions?

You can reach us at (202) 435-7700.

Remittance Rule Session

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We held a live session on October 16th to talk about the new requirements for remittance transfer providers.

The rule to implement the consumer protections created by the Dodd-Frank Act for certain electronic transfers of funds to other countries – the remittance rule – will go into effect on February 7, 2013.

You can read CFPB Director Richard Cordray’s full remarks and see the remittance rule presentation slides from the event.

If you missed the event, you can watch below:

Save the date, Seattle, Washington!

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Join us for a field hearing in Seattle, Washington on debt collection.

The field hearing will take place on Wednesday, Oct. 24, 2012, at 10 a.m at the Seattle Public Library, 1000 4th Avenue, Seattle, WA.

We’ll have remarks from CFPB Director, Richard Cordray, as well as testimony from consumer groups, industry representatives, and members of the public.

This event is open to the public and requires an RSVP.

To RSVP
Email cfpb.events@cfpb.gov with:

  • Your full name
  • Your organizational affiliation (if any)

See you there!

Updates to the consumer complaint database

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We’re excited to announce that we’re no longer in beta with our consumer complaint database.

We launched the beta version on June 19th publishing individual-level consumer complaint data — a first for a federal financial regulator.

Since that time, people have been evaluating and sharing the data on social media and in new apps. Today, we are taking additional steps to expand this service to the American people.

First, and as promised, we are releasing consumer credit card complaint data back to December 1, 2011 in the Consumer Complaint Database.

Second, thanks to all of the great feedback and insight we’ve gotten, we are removing the database’s beta tag. While we will continue to expand functionality, data fields, and the “look and feel” of the database, after performing for three months as designed and without incident, the database is no longer a beta product.

One potential area for database expansion is the inclusion of additional products and services. Over the summer we asked for public comment on this idea and got a wide range of comments from a range of interested stakeholders. We are in the process of evaluating those comments and anticipate a final Bureau decision in early 2013.

In addition to expanding the scope of the products covered by the database we continue to evaluate, among other things, the release of consumer narratives, the potential for normalization of the data to make apples-to-apples comparisons more user friendly, and the expansion of functionality to improve user experience.

Thank you for your help in getting the tool where it is today – we’re excited for what you’ll do with the data next.

Scott Pluta is the Assistant Director for Consumer Response at the Consumer Financial Protection Bureau.

Order: American Express is responsible for compensating customers for illegal practices

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As a result of today’s order, American Express must repay an estimated $85 million to approximately 250,000 consumers. American Express will return the money directly into the accounts of the affected consumers. If the consumer no longer holds the American Express card, American Express will mail a check or credit any outstanding balance.

  • Customers who were promised $300 for signing up for a Blue Sky Credit Card will get the $300.
  • Consumers who paid an illegal late fee will be reimbursed, with interest.
  • Consumers who paid old debt in response to deceptive promises to report payment to credit bureaus will be reimbursed the money they paid plus interest.
  • Consumers who were promised their debt would be forgiven but were denied new American Express cards because the debt was not really forgiven, will receive $100 and a pre-approved offer for a new card with terms we and the FDIC find acceptable. If the consumer already paid the waived or forgiven amount in order to get a new card, they will be refunded that amount plus interest.

Consumers are not required to take any action to receive their credit or check.

If you are one of the consumers affected by the order, American Express will notify you directly. They are responsible for notifying any affected consumers – any other entity that offers to help reclaim your money is likely a scam.

  

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