Yesterday, the Consumer Financial Protection Bureau (CFPB) issued a consent order requiring Discover Bank to pay a $2.5 million dollar fine and $16 million in refunds to consumers for illegal student loan servicing practices. The bank overstated the minimum amounts due on billing statements and denied consumers information they needed to obtain federal tax benefits. According to the CFPB, the company also engaged in illegal debt collection tactics.
Maura Dundon, an expert on student lending and a Senior Policy Counsel at the Center for Responsible Lending, gave the following statement:
The servicing and debt collection practices detailed in the Discover consent order demonstrate the harms that borrowers can face in the student loan market. The CFPB is appropriately investigating student loan servicers, but a larger, more comprehensive effort is urgently needed. The CFPB should develop new rules to protect all borrowers and address the abuses rampant in the broader student loan market.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Andrew High at Andrew.High@responsiblelending.org or 919-313-8533.