The Consumer Financial Protection Bureau, or CFPB, is a federal agency that helps protect consumers from financial harm. For millions of student loan borrowers, the CFPB has curbed predatory lenders and loan servicers. But the agency’s future is in limbo, putting into question whether student loan protections will still be in place.
Brief History of the CFPB
The CFPB was created in the wake of the Great Recession through the Dodd-Frank Act in 2010. Since then, the agency has protected borrowers from harmful practices in consumer financial services. Its impact has been significant.
According to the CFPB website, an estimated 205 million consumers or consumer accounts were eligible for relief thanks to the agency’s supervisory and enforcement work. Consumer relief from CFPB supervisory and enforcement work totaled more than $21 billion in compensation, canceled debts and principal reductions.
In February 2025, the Trump administration laid off employees from the CFPB and put a stop work order on the agency. After a lawsuit and court order, some employees were reinstated. However, many were placed on administrative leave and effectively unable to continue their work.
[Read: Best Private Student Loans.]
What Student Loan Protections Are at Risk If the CFPB Goes Away?
If the CFPB is effectively shut down or severely limited in its scope of work, some of the following student loan protections could be at risk.
Follow-Up About Student Loan Complaints
One of the primary functions of the Consumer Financial Protection Bureau is to accept complaints from consumers and borrowers about a financial product or service. The CFPB website states that the agency forwards 50,000 complaints each week to companies to get a response.
“Complaints were kind of the lifeblood of what we did,” says Julia Barnard, former student loan ombudsman at the CFPB, who was terminated from the agency on Feb. 13.
While you might still be able to submit a student loan complaint with the CFPB, with the agency gutted, those complaints may not be reviewed or passed on.
“We know that the consumer complaint system is kind of breaking down and decaying over time,” says Barnard. If the infrastructure or the agency itself no longer exists, student loan borrowers may not have their voices heard through official channels.
“If somebody, for example, has a typo in the name of the company in their complaint, it’s just going to fall through the cracks and won’t ever get forwarded,” Barnard says. “If somebody gets through that gauntlet and it goes to the company, I think if enforcement and supervision are kind of dark, then the company might have less of an incentive to answer the complaint or resolve the problem identified in the complaint.”
Action Against Predatory Lenders
The aim of the CFPB is to “protect consumers from unfair, deceptive or abusive practices.” Part of that is identifying predatory practices by lenders and taking action.
“The CFPB has been instrumental in reviewing and reining in predatory conduct of private student loan lenders and rogue for-profit schools, some that don’t fall under the purview of the Department of Education,” says Joshua Cohen, student loan lawyer at Cohen Consumer Law.
The CFPB uncovered illegal practices from private lenders who misled borrowers about their rights around repayment. For example, denying an auto-pay discount or stating that monthly payments could be paused in the event of job loss and later claiming that the benefit no longer existed. Some lenders denied eligible borrowers’ total and permanent disability discharge.
The agency also found that some private lenders weren’t clear about borrowers losing federal benefits when refinancing student loans. When borrowers refinance federal student loans with private programs, they lose federal benefits like student loan debt forgiveness, loan forbearance and deferment options.
“Without oversight, private lenders and for-profit institutions have little incentive to follow the law. It leaves states in charge of policing, which puts a strain on attorney general offices,” Cohen says. “Further, enforcement is not always practical for an AG’s office, especially when dealing with a foreign entity or violator that affects a small number of victims within a given state. The CFPB acted on a national level, which meant protection for all individuals, regardless of state of residence.”
[Read: Best Student Loan Refinance Lenders.]
Monitoring Loan Servicer Misconduct
The CFPB also monitors loan servicer misconduct. When federal loan repayment restarted after a three-year pause, the CFPB identified a range of issues with federal loan servicing, including:
— Failure to provide timely service by phone
— Deceptive billing statements with wrong monthly payment amounts and due dates
— Problems with processing income-driven repayment plan, or IDR, applications
— Withdrawal of an unauthorized amount
“One thing we found recently was violations of the Electronic Funds Transfer Act when people were having money pulled from their accounts illegally for their student loans,” says Barnard, who notes that sometimes borrowers had payments pulled twice or for double the amount.
When the CFPB identifies these issues, they share their findings so companies can take action and fix them. If necessary, they can pursue enforcement action. For example, in September 2024 the CFPB banned Navient from federal loan servicing and ordered the company to pay a $20 million penalty and $100 million to borrowers.
The CFPB alleges that Navient misled borrowers about IDR plans, mishandled student loan payments and deceived borrowers about cosigner release requirements.
Additionally, the CFPB sued the loan servicer Pennsylvania Higher Education Assistance Agency for illegally collecting on student loans after they were discharged in bankruptcy. And PHEAA sent false information to credit reporting agencies. Due to the changes in the CFPB and political pressure, however, the lawsuit has been dropped, according to the Student Borrower Protection Center.
In 2015, the CFPB ordered Discover Bank to refund $16 million to consumers and pay a $2.5 million penalty for illegal student loan servicing practices. In 2016, the CFPB ordered Wells Fargo to pay $410,000 in relief to student loan borrowers plus a $3.6 million penalty for illegal student loan servicing practices. These companies inflated balances, charged borrowers illegal fees and misled them.
Barnard says she worked closely with the U.S. Department of Education, which serves as a lender or guarantor for federal student loans. The U.S. Department of Education contracts with numerous loan servicers to manage student loan borrower repayment.
However, the U.S. Department of Education has also been hit with layoffs, and on March 20, Trump signed an executive order seeking to dismantle the agency. Eliminating the department completely requires congressional approval, and its future is uncertain.
Student Loan Debt Forgiveness Oversight
Barnard notes that processing Public Service Loan Forgiveness, or PSLF, applications and IDR paperwork already takes a substantial amount of time. Now, the Trump administration is trying to change the terms of PSLF and the availability of IDR plans. PSLF and IDR are the two primary ways federal student loan borrowers can obtain student loan debt forgiveness.
The Biden administration’s SAVE plan is stuck in legal limbo and has temporarily paused IDR and loan consolidation applications. The CFPB has found that loan servicers have misled borrowers about their eligibility for student loan debt forgiveness programs like PSLF.
[READ: Fastest Co-Signer Release Student Loans]
The Bottom Line
During this time of CFPB uncertainty, it’s important for student loan borrowers to advocate for themselves. Barnard recommends downloading your student loan documents. If you’re pursuing forgiveness, keep track of your paperwork and payments. While there are questions about the future of the agency and the potential impact on protections and student loan debt forgiveness, Barnard offers this reminder.
“The laws have not gone away. It might take a lot of fighting to enforce the laws that exist,” says Barnard. “I think it’s important to use the avenues that people are legally entitled to and then also, I think submitting complaints directly with congressional representatives.”
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What Student Loan Protections Can We Lose if the CFPB Goes Away? originally appeared on usnews.com
