Congresswoman Mia Love and Representatives Rob Bishop (R-UT), Suzanne Bonamici (D-OR), and Jared Polis (D-CO) challenged the Department of Education to reconsider its decision to block states from regulating student loan companies.
You can read a full copy of the lawmakers’ letter here.
“My concern focuses on students who are not being assisted properly by some loan servicers,” Rep. Love said. “Those companies should be held accountable, and I’m troubled by the Department’s plan to preempt states from any oversight of these bad actors. I’m concerned that this move will only result in less transparency and accountability from the servicers, and in turn, will result in ever worse service for our students.”
In the letter to Education Secretary Betsy DeVos, the lawmakers write: “States have a historic role in consumer protection regulation, including protecting residents from predatory, unfair, and deceptive business practices. The Department’s interpretation, if implemented, would preempt state consumer protection laws and shield many of the largest private-sector student loan companies from oversight by state law enforcement officials and regulators. The Department’s interpretation attempts to create broad new legal standards not intended by Congress under the Higher Education Act and undermines state efforts to protect tens of millions of Americans with student debt.”
The Department has issued a notice of interpretation to limit the power of states to protect their residents from fraudulent and abusive practices. All 50 governors, a bipartisan coalition of 25 state Attorneys General, and the heads of all 50 state banking agencies oppose the interpretation.
The bipartisan group of lawmakers cited the National Governor’s Association response: “States have stepped up to fill the void left, we believe, by the absence of federal protections for student loan borrowers, from potential abusive practices by companies servicing student loans. With this declaration, the department moves to block state policies protecting student borrowers by establishing a federal regulatory ceiling. We are concerned the department is heading in a direction that runs counter to the principles of collaborative federalism governors presented to Congress last week.”