Overview
Title
To amend the Consumer Financial Protection Act of 2010 to establish the position of the Assistant Director and Student Loan Borrower Advocate of the Bureau of Consumer Financial Protection, to establish the Office for Students and Young Consumers of the Bureau, and for other purposes.
ELI5 AI
The bill wants to help students by making a new leader and office to give advice about student loans and teach about money, but there are worries it might repeat work others already do and cause privacy issues.
Summary AI
The Students and Young Consumers Empowerment Act aims to amend the Consumer Financial Protection Act of 2010 by creating the role of Assistant Director and Student Loan Borrower Advocate. This position will lead the newly established Office for Students and Young Consumers within the Bureau of Consumer Financial Protection. The role involves coordinating with the Department of Education to help students with loan complaints, compiling reports on the loan market and student banking, and educating young consumers on financial products. The bill calls for collaboration with federal and state agencies to better protect students and young consumers in financial matters.
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AnalysisAI
General Summary of the Bill
The proposed legislation, titled the "Students and Young Consumers Empowerment Act," aims to amend the Consumer Financial Protection Act of 2010. It seeks to create a new position within the Bureau of Consumer Financial Protection—the Assistant Director and Student Loan Borrower Advocate. This role is designed to assist students and young consumers by addressing issues related to student loans and financial products. The bill also establishes the Office for Students and Young Consumers to further support this mission through education and empowerment initiatives.
The bill mandates the creation of a memorandum of understanding between this new position and the Department of Education to streamline assistance for student borrowers and supports oversight through required reports to Congress about trends and risks in the student loan market.
Summary of Significant Issues
One of the main concerns with this bill is the potential overlap between the new Assistant Director and existing roles, such as the Student Loan Ombudsman. This duplication could lead to inefficiencies and unnecessary expenditure. Moreover, the bill gives the Assistant Director significant authority to gather information from "covered persons" and "service providers" without adequately defining these terms, raising concerns about excessive reach and privacy.
The memorandum of understanding between the Bureau of Consumer Financial Protection and the Department of Education lacks clarity, particularly concerning the terms of data access, which might lead to privacy and security risks. Furthermore, while the bill enables broad access to Department of Education records, it also raises potential privacy concerns if not properly managed.
Finally, the bill does not define benchmarks to assess the effectiveness of the new Assistant Director, which might lead to accountability issues in measuring success.
Potential Impact on the Public
The impact of this bill on the general public hinges on its ability to address current challenges faced by student loan borrowers. By providing a dedicated advocate for student loan issues, the bill could offer more focused support to borrowers navigating complex loan systems. Enhanced oversight and reporting might also lead to improved consumer protections, benefiting the broader public.
However, the potential for overlapping roles and unclear definitions within the bill could dilute its effectiveness. The broad data access granted may lead to concerns about personal information security, potentially impacting public trust.
Impact on Specific Stakeholders
Students and Young Consumers: If effectively implemented, the bill could positively impact students and young consumers by delivering better resources and support systems to manage financial challenges, particularly those related to education. The increased focus on education and empowerment could foster greater financial literacy among young consumers.
Financial Institutions and Service Providers: These stakeholders might face challenges due to the new reporting requirements outlined in the bill. Smaller entities, in particular, may experience a greater administrative burden without clear justification for the necessity of data collection, potentially leading to increased operational costs.
Regulatory Bodies: The Bureau of Consumer Financial Protection, with added responsibilities, might need additional resources or restructuring to effectively manage these new duties. Coordination with the Department of Education will be critical for success, yet this could also pose a challenge if the partnership isn't clearly defined and managed.
In conclusion, while the bill presents a promising approach to supporting student borrowers, significant adjustments and clarifications would be necessary to optimize its effectiveness and address potential issues related to redundancy, privacy, and accountability.
Issues
The roles and responsibilities of the Assistant Director and Student Loan Borrower Advocate in Section 2 (and by reference Section 1035) could potentially overlap with existing entities like the Student Loan Ombudsman, leading to redundancy and unnecessary expenditure.
The authority granted in Section 2 (and by reference Section 1035) for the Assistant Director and Student Loan Borrower Advocate to gather information from 'covered persons and service providers' raises concerns about an excessive reach and potential privacy issues without adequate safeguards.
There is an absence of specific definitions for terms like 'covered persons' and 'service providers' in Section 2 (and by reference Section 1035), which could lead to significant ambiguities in interpretation and execution.
The memorandum of understanding in Section 2(b)(2) (and by reference Sections 1035 and 3) regarding coordination between the Bureau of Consumer Financial Protection and the Department of Education lacks specifics on access terms, possibly leading to privacy and security issues in data handling.
Section 3 allows for broad access to Department of Education's information systems, raising potential privacy or security concerns if access is not properly monitored or limited.
The requirement for reports and information from covered persons in Section 2 (and by reference Section 1035) might disproportionately burden smaller entities without providing clear justification for the necessity of the data.
The absence of explicit performance benchmarks in Section 1035 to evaluate the effectiveness of the Assistant Director and Student Loan Borrower Advocate's efforts might undermine accountability.
The limitation clause on gathering personally identifiable financial information in Section 1035 might need more clarity to ensure consumer privacy is adequately protected without obstructing necessary data collection.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill announces its official name, “Students and Young Consumers Empowerment Act.”
2. Assistant Director and Student Loan Borrower Advocate Read Opens in new tab
Summary AI
In this section of the bill, a new position called the Assistant Director and Student Loan Borrower Advocate is established to help students with loan issues by coordinating efforts with the Department of Education and handling complaints. This role is also responsible for producing annual reports for Congress about risks and trends in the student loan marketplace and on-campus banking, as well as potential risks for young consumers, to enhance financial protection and education.
1035. Assistant Director and Student Loan Borrower Advocate Read Opens in new tab
Summary AI
The section establishes the role of an Assistant Director and Student Loan Borrower Advocate, who is tasked with helping students and young consumers resolve loan issues, coordinating with other federal agencies, and reporting on risks in the student loan and financial markets. This role also involves leading the Office for Students and Young Consumers to empower young people to make informed financial decisions.
3. Duties of the Department of Education Read Opens in new tab
Summary AI
The text amends the Higher Education Act to require the Secretary of Education and other officials to create a formal agreement with the Bureau of Consumer Financial Protection's Assistant Director and Student Loan Borrower Advocate. This agreement is meant to improve help for borrowers with issues related to student loans and allows the Bureau to access important loan-related information from the Department's systems.
144. Memorandum of understanding with the Assistant Director and Student Loan Borrower Advocate Read Opens in new tab
Summary AI
The section requires the Secretary of Education, along with certain appointed officials, to create a memorandum of understanding with the Assistant Director and Student Loan Borrower Advocate. This agreement is meant to help coordinate assistance for borrowers with complaints about their student loans and allows access to necessary information from the Department's systems.