Issue four of our weekly update from Washington, designed to keep NACBA members informed about any significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks.
ON THE HILL Before leaving late last week for an extended recess, Congress announced the introduction of three new bills aimed at addressing the debt burden faced by many student loan borrowers:
- H.R. 6239 (The HIGHER ED Act) includes a provision to restore bankruptcy protection for student loans. You can read a summary of the bill here.
- H.R. 6197, Supporting America’s Young Entrepreneurs Act, addresses the effects of a heavy student debt burden on the creation of new business. Read about the bill here.
- The Transparency in Student Lending Act (S. 3399) was introduced in the Senate, and as its title suggests, addresses the information that must be provided to borrowers. You can read a summary of the bill here.
IN THE AGENCIES The Internal Revenue Service (IRS) announced that it plans to begin private collection of certain overdue federal tax debts next spring and has selected four contractors to implement the new program. Read the full announcement here.
The Consumer Financial Protection Bureau (CFPB) issued the procedures its examiners will use in identifying consumer harm and risks related to the Military Lending Act rule which was updated in July 2015. The exam procedures released by the Bureau provide guidance to industry on what the CFPB will be looking for during reviews covering the amended regulation. The full press release from the CFPB can be read here.
The CFPB recently published a blogpost and consumer advisory on credit repair companies, outlining consumers’ rights and warning of potentially harmful practices. The CFPB wants to be sure that consumers know that they do not have to pay anyone to help correct inaccurate information in their credit reports and that there are steps they can take if they need to dispute inaccurate information in their reports.
At the request of the Federal Trade Commission (FTC), a federal court has found that racecar driver Scott A. Tucker and several corporate defendants in a Kansas City-based payday lending scheme violated Section 5 of the FTC Act and has ordered them to pay $1.3 billion for deceiving consumers across the country and illegally charging them undisclosed and inflated fees. You can read the full press release from the FTC here.
FROM THE INTEREST GROUPS Consumer advocates expressed disappointment over an announcement that four private debt collection companies were selected to collect federal tax debts, one of which had been terminated last year by the U.S. Department of Education. As noted in the “In the Agencies” section of this report, the IRS announced that private debt collectors will begin collecting tax debts next spring. Pioneer Credit Recovery, whose contract to collect student loans was terminated last year by the U.S. Department of Education because it provided inaccurate information to borrowers, is one of the companies the IRS will use.
In a response to the CFPB’s request for comment on its draft of a proposed rule on payday lending, People’s Action Institute and Americans for Financial Reform released Caught in the Debt Trap, a heart wrenching report that tells the real story about what business as usual means to thousands of borrowers around the country and called on the CFPB to ensure the final rule is strong enough to make a real difference.
The Center for Responsible Lending (CRL) along with other advocacy groups, also responded to the CFPB request for comments with a strongly worded letter. NACBA supports the CRL letter and has submitted comments seeking a stronger payday and title loan rule from the CFPB.