The CFPB recently sent a letter to private student loan servicers asking them for information about their practices for handling extra payments from borrowers (i.e., payments in excess of the minimum amount due). This past October, the CFPB released a sample letter for a student loan borrower to use to provide standing instructions to a servicer for how to apply extra payments. In its letter seeking information from servicers, the CFPB notes that it had received inconsistent information from industry participants about the usefulness of these instructions.
The CFPB’s letter advises servicers that their responses are “entirely voluntary” and will help the CFPB “respond to consumer inquiries and develop additional consumer education materials.” The CFPB wants input from servicers on the following five topics:
- Payments the servicer receives electronically from the U.S. Department of Defense or third parties on loans to active-duty servicemembers who qualify for Defense Department loan repayment assistance programs
- Payments made through online bill payment systems
- Payments made through direct debits initiated on the servicer’s online servicing platform
- The servicer’s ability to accommodate borrowers who provide standing instructions on how the servicer should direct future extra payments and how the servicer responds to such borrowers
- The servicer’s communication of its policies to borrowers on directing extra payments to a specific loan
The CFPB would like servicers to respond by December 17.