Dec 03, 2013 04:25 PM EST By Russell Westerholm, UniversityHerald Reporter

The Consumer Financial Protection Bureau (CFPB) has announced it finalized a rule allowing it to supervise nonbank student loan providers like Sallie Mae.

According to the Huffington Post, the CFPB made its announcement amid criticism against the U.S. Education Department for its loose supervision of its leading student loan collectors.

Sallie Mae is also under fire for alleged lending fraud and other questionable practices, with the CFPB heading the allegations. The federal agency has been encouraging people who have experienced prolonged difficulty dealing with Sallie Mae to file formal complaints against the loan provider in an effort to hold them accountable.

The CFPB will now supervise the Education Department's seven preferred student loan providers. They were not named, but are sure to include Sallie Mae, Great Lakes Educational Loan Services, Nelnet Servicing and the Pennsylvania Higher Education Assistance Agency.

"The CFPB is an agency that is signaling it wants to be rigorous with its oversight. The Department of Education hasn't been," said Deanne Loonin, director of the National Consumer Law Center's student-loan borrower assistance project. "In some of the best news for borrowers, the CFPB has signaled it is interested in this issue, they see a lot of problems in this area, and they're going to shed more light on these problems."

Borrower advocates believe the CFPB's supervision will quickly improve customer service and programs designed to help the borrower.

"The Department of Education administers the federal student loan programs that comprise more than 85 percent of the market, and we will continue to work closely with them," Richard Cordray, CFPB director, said in a statement. "By making sure these companies comply with federal consumer law, we can ensure that the marketplace for student loans is operating more effectively."

According to data from the Education Department and the CFPB, programs designed to help borrowers with repayment are not being used as often as they can be. Still, defaults are more common than ever, refinancings rarely ever take place and the total amount of student loan debt - $1.2 trillion - is the second-highest household debt in the country only to home mortgages.

"As the recession decimated the job market for young graduates, a growing share of student loan borrowers reached out to their servicers for help," Cordray said. "The problems they have encountered bear a striking resemblance to the problems faced by homeowners in the run-up to the financial crisis."

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