FOR IMMEDIATE RELEASE:
March 9, 2018
CONTACT:
Alexis Goldstein, Americans for Financial Reform
alexis@ourfinancialsecurity.org / (202) 973-8005
JOINT STATEMENT BY AMERICANS FOR FINANCIAL REFORM AND CONSUMER FEDERATION OF AMERICA: DEVOS ONCE AGAIN PUTS SERVICERS BEFORE STUDENTS
Americans for Financial Reform and the Consumer Federation of America strongly condemn the Department of Education’s interpretation, scheduled to be published in the federal register on March 12, 2018, that attempts to claim that federal law preempts the rights of individual states to take action against student loan servicers who break the law. This interpretation is an attempt to actively block states from taking steps to protect their citizens and hold servicers accountable when they rip them off, something the student loan servicing industry has long desired. At a time when Secretary Betsy DeVos has consistently turned her back on students by rescinding memos and re-writing rules meant to protect them, states are a crucial backstop for protecting students.
The Chair of the House Ed and Workforce Committee, Virginia Foxx, seeks to achieve the same ends as the Dept of ED does in this memo with a change in the Higher Education Act statute proposed in The PROSPER Act. The Department’s attempt to claim that federal law preempts state law is highly questionable at best, and will likely be contested by state Attorneys General.
We’ve seen repeat and continuing wrongdoing from student loan servicers like Navient, who’ve illegally overcharged Americans, including members of the military, and illegally steered struggling borrowers toward paying more than they had to on their loans. And there have been over 60,000 complaints submitted to the Consumer Financial Protection Bureau from borrowers about student loan servicers and debt collection companies.
The ability for states to enact laws governing how servicers may interact with borrowers, and the ability of state Attorneys General to file lawsuits against servicers for consumer abuses, are crucial accountability mechanisms that must continue. A bipartisan group of Attorneys General and state banking regulators have stated that they have a right to protect their citizens. That the Department would attempt in any way to prevent these state level efforts to defend borrowers simply shows that under Betsy DeVos, it is servicers before students.