All the charges apply to private student loans that Citibank services. The bank unloaded most of its student loan business to Discover in 2010, which was subsequently charged by the CFPB with many of the same charges leveled at Citibank on Tuesday. The action against Discover in 2015 was the agency’s first involving student loan servicing practices and involved $18.5 million in charges.
(Related: DeVos Sued Over Plans to End Protections for Student Borrowers)
Since then, the CFPB has charged Wells Fargo, National Collegiate Student Loan Trust and Navient, the largest student loan servicer, with multiple violations. A recent agency report found that the CFPB has fielded tens of thousands of complaints from student loan borrowers over the past six years and has provided $750 million worth of relief. Student loan complaints over the 12 months ended August 31 more than doubled, according to the report.
(Related: Morningstar’s Good and Bad 529 Savings Plans in 2017)
The agency also previously joined with the Department of Education to seek millions of dollars in relief from for-profit Corinthian Colleges and the ITT Technical Institute for predatory loan practices. The DOE under its current Secretary Betsy DeVos, however, has failed to chancel those loans, according to Sens. Elizabeth Warren (D-Massachusetts), Dick Durbin (D-Illinois) and 14 Senate colleagues who issued a report last week about the DOE’s inaction and sent it to the Secretary.
Attorneys general from 17 states and the District of Columbia on Tuesday are suing DeVos for a DOE decision to delay and decline to enforce part of the Gainful Employment Rule, which requires for-profit and other educational institutions that rely upon federal aid for the most of their revenue to show that their programs prepare students to find employment that will provide them the ability to repay their loans.