The letters "CFPB" may not be much more than alphabet soup to your average student loan borrower. They stand for Consumer Financial Protection Bureau, a new-ish federal agency — created in 2011 — with a unique mission and a big effect on student lenders and for-profit colleges accused of defrauding or otherwise mistreating Americans.
But the U.S. Education Department has just called a halt to the enforcement collaboration between itself and CFPB. This move leaves 44 million student loan borrowers, owing $1.4 trillion in debt, with potentially less, or at least less-coordinated, oversight of their rights.
To understand why, let's look at how the CFPB got here, and how it does its work. The Dodd-Frank Act, passed as part of the federal response to the 2007-08 mortgage crisis, established the CFPB to enforce consumer finance law.
Among its tasks, the bureau responds to consumer complaints about loans, mortgages and other financial products. To date, it has collected 20,000 complaints. Those gripes are key to the bureau's broader work, says Seth Frotman, CFPB's student loan ombudsman.
"We always encourage people to complain to us when they run into trouble with their student loan company," Frotman says. "Not only on behalf of yourself, but if you are encountering a situation, it's likely that somebody else is."
Complaints help the CFPB spot patterns that may be "systemic," he adds. The agency can launch investigations and sue companies for violating the law. It can also "supervise" a company, meaning CFPB staffers come on-site to ensure compliance.
This enforcement has helped get money back in the pockets of borrowers. In 2015, people who had attended the for-profit Corinthian Colleges got $480 million of student loans erased.