CFPB: The Consumer Financial Protection Bureau… What it means to you in Higher Education! October 26, 2014 Carl Perry – Progressive Financial Services, Inc.

Agenda: Overview of CFPB Higher Education Who is who? Your Business Partners

Overview of CFPB:

Key Players in CFPB:  Management Richard Cordray, Director Rohit Chopra, Assistant Director – Students Holly Petraeus, Assistant Director – Service Member Affairs  Relationships Department of Education Department of Treasury Department of Justice Veterans’ Affairs and Department of Defense

Role & Responsibilities:  CFPB established to protect consumers: Conduct rule-making, supervision, and enforcement for Federal consumer financial protection laws Restrict unfair, deceptive, or abusive acts or practices Take consumer complaints Promote financial education Research consumer behavior Monitor financial markets for new risks to consumers Enforce laws that outlaw discrimination and other unfair treatment in consumer finance  President Obama appointed Richard Cordray Director, CFPB in Jan 2012

Role & Responsibilities:  Not regulators of schools, but of financial institutions Seek to arm schools with better tools to evaluate financial institutions’ offerings  When the school is a lender… Partnerships with banks High cost private loans Advocating redefinition of disclosure requirements to include TVII (HHS) loans with ‘federal loans’

Strategic Priorities:  Greater involvement in the private loan process Requiring school certification of ALL private loans  Financial education Research shows much of the financial literacy efforts are ineffective  Servicing  Collections  Incentive payments to schools*

CFPB Requests Information:  Financial Products Marketed to Students Enrolled in Institutions of Higher Education  Focus on ‘campus affinity products’ Financial products and services that carry an endorsement (either explicit or implicit) or mark of an institution of higher education, e.g., ‘one card’ student ID-purchase cards; disbursement debit cards, etc. Not an investigation of any agreement or school, but a quest to understand how schools enter into these agreements  Continue to request information regarding issues that are of interest to CFPB

Prior requests for Information:  Initiative to Promote Student Loan Affordability  Focus on alternative repayment options for private student loan borrowers  Comments were due by April 8, 2013  CFPB did a ANPRM on the FDCPA in early 2014

Higher Education: Resource and advocate versus regulator Inform policy making Create tools for prospective borrowers Drive students and families to borrow less Address underutilized federal borrowing capacity

Higher Education:

Financial Aid Shopping Sheet: Estimated Cost of Attendance Grants and Scholarships Net Costs Work Options Loan Options Other Options

► The Department of Education and the CFPB introduced the financial aid shopping sheet  An effort to make information about the cost of college and financial aid packages more transparent and comparable for students and parents  Schools that signed onto the Principles of Excellence would be required to send the Shopping Sheet to prospective undergraduate students who are veterans or active duty military, and their families. Use of the Shopping Sheet for any other student is voluntary Financial Aid Shopping Sheet:

 Institutions would not be required to substitute this Shopping Sheet for their own financial aid award letters  Populated data will be based on comparable schools as defined by the Department  letter/CFPB,_ED_Issue_Final_Version_of _Financial_Aid_Shopping_Sheet.aspx letter/CFPB,_ED_Issue_Final_Version_of More on Financial Aid Shopping Sheet:

Annual Report of the CFPB Student Loan Ombudsman: The CFPB received nearly 2,900 public private student loan complaints  This is a relatively small number given that there are more than $150 billion in private student loans outstanding  The vast majority of the complaints were related to loan servicing and loan modification issues  Active-duty service members and their families reported that they sometimes experience difficulty exercising their rights under the Service Members Civil Relief Act

Service Member Affairs:  Focus on ‘Planning for Your Future’ & ‘Protecting Your Finances’  Planning for Your Future  Helping you save  Dollars for degrees  Protecting Your Finances  Accessing your VA benefits  Deployment and your credit card

Service Member Affairs:  Learn about and raise awareness of unique military-friendly products already being offered by financial institutions  Start a dialogue between the financial- services industry and the military services about how to best serve those who serve our country

Service Member Affairs:

Business Processes Impacted:  Private Loans  Debit/Campus Cards  Banking  Collection Agencies

Private (alternative) Loans:  Lender Requirements Statutory Regulatory  Institutional Requirements TILA SLSA, NCHER & ACA are active here Do we have input from the attendees?

Debit Cards:  Student Refunds Who issues cards Students’ accounts Fees  Vendors and Issues  Revenue sharing

NACUBO’s Best Practices: Debit Cards:  Keep Students First  Encourage Students to Use Financial Institutions  Offer Choices  Encourage Electronic Refunds  Utilize a Competitive Process and Limit Exclusivity  Engage Students in the Vendor Selection Process

NACUBO’s Best Practices: Debit Cards:  Comply with Federal and State Regulations  Negotiate Low or No-Fee Options and Convenient Services for Students  Avoid Unscrupulous Marketing  Make Contracts Transparent  Do you have a best practice to share?

The CFPB oversight of consumer compliance rules from 7 agencies: Federal Reserve Board; Office of the Comptroller of the Currency; Federal Deposit Insurance Corp.; Office of Thrift Supervision; National Credit Union Administration; Federal Trade Commission; and Department of Housing and Urban Development

CFPB Complaint Portal: What happens after I submit a complaint? CFPB forwards your complaint to the company and work to get a response. After they forward your complaint, the company has 15 days to respond to you and the CFPB. Companies are expected to close all but the most complicated complaints within 60 days. You’ll be able to review the response and give CFPB feedback. If we find that another agency would be better able to assist, we will forward your complaint and let you know.

CFPB Complaint Portal: How will you use my information? We forward the information you provide so the company can identify you and address your issue. We also share complaint data with state and federal agencies who oversee financial products and services, and we publish a database of non- personal complaint information so the public knows what kinds of complaints we receive and how companies respond.

Banking :  Financial relationships/conditions in contracts.  Impact on students/families

Collection Agencies:  CFPB requirements on third party debt collectors.  I would make sure my agencies were on the portal!  Impact on colleges/universities.  What should you look for?

Recent News: A report from the Consumer Financial Protection Bureau cites a 38% increase in complaints from private student-loan borrowers, many of whom said lenders are not flexible about repayment terms. CBA General Counsel Steve Zeisel said most borrowers are successfully repaying their loans, but CBA is "working with the prudential regulators to develop short and long term loan modification programs to provide borrowers with more flexibility, particularly in the early stages of their career."

Resources: CFPB Website CFPB RFI: Alternative Repayment Options for Private Student Loan Borrowers CFPB RFI: Financial Products Marketed to Students financial-products-marketed-to-students-enrolled-in-institutions-of-higher-education/ Private Student Loan Report Updated 8/29/ Financial Aid Shopping Sheet: letter/CFPB,_ED_Issue_Final_Version_of_Financial_Aid_Shopping_Sheet.aspx

Questions & Input! Carl Perry – Vice President of COHEAO Senior Vice President Thank you for your time and attention!