Photo Courtesy of U.S. Department of Education
Education Secretary Betsy DeVos
By Forum Staff
A coalition of 20 state attorneys general this week demanded that the U.S. Department of Education stop its systematic rollback of protections for student loan borrowers.
In a letter sent on Tuesday to Education Secretary Betsy DeVos, the coalition charges the DOE with three main faults after the Department terminated two key memoranda of understanding it had with the Consumer Financial Protection Bureau:
The DOE falsely asserted it has exclusive jurisdiction over companies that service federal student loans when, in fact, student loan servicers are under the jurisdiction of the CFPB, Federal Trade Commission, Department of Justice, attorneys general, and other law enforcement agencies.
The Aug. 31 letter terminating two Memoranda of Understanding with the CFPB that streamlined the supervision of student loan servicers is the latest in a series of actions taken by the DOE to strip critical protections for millions of students and families repaying student loans.
The DOE misrepresents and undermines the strong work done by the CFPB on behalf of students and families across the country.
As the AGs detail in the missive: “Contrary to the department’s assertion, Congress did not exempt the $1.3 trillion federal student loan market from the Consumer Financial Protection Bureau’s jurisdiction – or from the jurisdiction of any other law enforcement agencies. … Not only is the department’s assertion demonstrably false, but such an exemption would make no sense – the market for federal student loan servicers is bigger than any other consumer finance market except mortgages. Moreover, student loan borrowers, who in most cases cannot discharge their student loans through bankruptcy, are among the most vulnerable borrowers.”
Additionally, the attorneys general highlighted the work the CFPB has done to protect students and families, including:
• Processing complaints from more than 40,000 student loan borrowers from all 50 states
• With assistance from Washington State and Illinois, suing Navient, the nation’s largest student loan servicer, for steering borrowers into costly repayment plans that benefit the servicer, not the borrower
• Cracking down on abusive for-profit colleges ITT Tech and Corinthian Colleges Inc.
• Halting illegal loan servicing practices at Wells Fargo, and
• Working with state attorneys general to create an online tool that helps students plan for college by comparing financial aid offers, loan commitments and earnings potential.
“Secretary DeVos and the Trump administration have repeatedly rolled back vital protections for borrowers, putting deceptive lenders above the very students the Department of Education is supposed to serve,” Schneiderman said. “Attorneys general have fought these destructive efforts every step of the way. I won’t allow New Yorkers to be victimized by the very system that’s meant to help them get ahead.”
The letter to DeVos was organized by Pennsylvania Attorney General Josh Shapiro, and signed by Schneiderman, and the attorneys general of California, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington, as well as the executive director of the Hawaii Office of Consumer Protection.