Betsy DeVos
Secretary Of Education Betsy DeVos, testifies during her confirmation hearing before the Senate Health, Education, Labor and Pensions Committee in the Dirksen Senate Office Building on Capitol Hill in Washington, D.C., Jan. 17, 2017. Getty Images/ Chip Somodevilla

The Education Department is not doing enough to regulate and stomp out fraudulent practices by student loan lenders, the head of the Consumer Financial Protection Bureau (CFPB), Kathy Kraninger, wrote in a letter obtained by NPR earlier this week.

Kraninger said in the letter that student loan servicers "have declined to produce information requested by the bureau for supervisory examinations."

This information would help the CFPB perform its regulatory duties on student loan providers.

Kraninger said that the Education Department has told the student loan providers not to provide the information due to what the Department deems to be "privacy" concerns.

The letter was written as a response to Massachusetts Sen.Elizabeth Warren and other Democratic lawmakers who are concerned that the CFPB has "abandoned its supervision and enforcement activities" in regards to student loans.

Seth Frotman, the former CFPB student loan ombudsman, finds the allegations that Kraninger made towards the Department of Education to be "quite remarkable."

"The head of the Consumer Financial Protection Bureau is telling the world that the secretary of education has put in place a series of policies that are obstructing federal law enforcement officials from standing up for the millions of Americans with student debt," he told NPR.

In the past, student loan servicers have had lawsuits filed against them due to allegations that they had been acting in bad faith. Student loan provider Navient, which split from Sallie Mae, had a lawsuit filed against it last October by the American Federation of Teachers. Navient was allegedly misdirecting student loan borrowers away from the FedLoan loan servicer, whose loans could be forgiven under the Public Service Loan Forgiveness (PSLF) scheme in favor of Navient loans, so that the company could earn fees.

The Public Service Loan Forgiveness plan allows students with student loan debt to have their debt burden wiped away if they work in a public job, such as a school teacher, after a set period of time, but only if students take loans under the FedLoan service. Since the students didn't take loans under the FedLoan service and were misdirected to taking loans from Navient, they couldn't qualify for the PSLF.

In 2017, the CFPB also filed a still ongoing lawsuit against Navient for providing false information to student loan borrowers and processing payments incorrectly, among other issues.

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