Attorneys general: Education Department’s actions “strip back critical protections” for student loan borrowers; vow to “vigorously enforce" consumer protection laws
DES MOINES – Attorney General Tom Miller today joined a group of state attorneys general in a letter conveying concerns to U.S. Department of Education Secretary Betsy DeVos over the department’s recent decision to end a pair of agreements to share information with the Consumer Financial Protection Bureau (CFPB) in federal student loan matters.
The Education Department’s decision, through an August 31 letter to the CFPB terminating two key memorandums of understanding between the two agencies, is the “latest in a series of actions by the department to strip back critical protections for the tens of millions of families who are repaying student loans,” the 19 attorneys general wrote in a letter to DeVos.
The attorneys general took issue with the Education Department’s rationale for no longer collaborating with the CFPB.
“The letter is incorrect as a matter of law: the Department of Education does not have exclusive jurisdiction over companies that service federal student loans,” the attorneys general wrote. “Instead, as courts have found and Congress has made clear, loan servicers are subject to the jurisdiction of the CFPB, Federal Trade Commission, Department of Justice, attorneys general, and other law enforcement agencies,” they added. “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 wrote, the Education Department’s termination letter “misconstrues the excellent work the CFPB has done to protect students and families” nationwide. “The CFPB has stood up for tens of millions of families trying to repay student loans and for victims of for-profit colleges that fail to deliver a worthwhile education.”
Even if the Education Department refuses to reconsider its notice to terminate the two agreements with the CFPB, the state attorneys general added they will “continue to vigorously enforce consumer protection and other laws to protect student loan borrowers and hold servicers accountable.”