Twenty-One AGs Urge Education Secretary to Reconsider Rollback of Student Loan Reforms
/In a letter sent last week, 21 state attorneys general and the Office of Consumer Protection of Hawaii urged Secretary of Education Betsy DeVos to immediately reconsider “the Department of Education’s revocation of critical student loan service reforms.” The policy and guidance memoranda withdrawn by the Department addressed industry-wide procedures by student loan servicing companies that were the subject of investigations and enforcement actions by the Illinois and Washington State Attorneys General, among others.
The April 24 letter highlights some of the industry practices that contributed to more than a quarter of borrowers being delinquent or in default on a student loan, according to a report by the Consumer Financial Protection Bureau (CFPB):
“In its 2015 report, the CFPB identified troubling student loan servicer practices – including paperwork processing errors and failure to provide accurate information – that discourage the use of income-driven repayment plans. By reforming service incentives and strengthening consumer protections, the rescinded guidance sought to eliminate the loan servicing failures that keep borrowers from entering affordable repayment plans.”
According to Forbes, 44 million borrowers owe approximately $1.3 trillion in student loans, making it the second-largest type of consumer debt behind mortgages.
- Letter from Twenty-One State Attorneys General to Department of Education on Revocation of Student Loan Borrower Protections (April 24, 2017).
- Press Release, Illinois Attorney General's Office, Madigan & 20 Attorneys General Oppose U.S. Department of Education’s Rollback of Student Loan Servicing Reforms (April 24, 2017).
- Consumer Financial Protection Bureau report, Student loan servicing: Analysis of public input and recommendations for reform (September 2015).
