ATG NEWS RELEASE: Hawaii joins state coalition demanding U.S. Education Secretary Betsy DeVos stop attacking student borrowersPosted on Sep 26, 2017 in Latest News
HONOLULU – Hawaii Attorney General Doug Chin and Executive Director of the Hawaii Office of Consumer Protection Steve Levins today joined a coalition of states demanding U.S. Department of Education (USDOE) Secretary Betsy DeVos stop her systematic rollback of critical protections for student loan borrowers.
Attorney General Chin and Executive Director Levins said, “The United States Department of Education is supposed to be helping American students obtain a legitimate education that won’t financially cripple them. Instead, inexplicably, its actions are punishing students and benefiting predatory lenders. This must stop.”
The letter to Secretary DeVos, led by Pennsylvania Attorney General Josh Shapiro and joined by 19 other states and the District of Columbia, finds three main faults with an August decision by the USDOE to end two memoranda of understanding it had with the Consumer Financial Protection Bureau (CFPB):
- USDOE falsely asserted it has exclusive jurisdiction over companies that service federal student loans. In fact, student loan servicers are under the joint jurisdiction of the CFPB, Federal Trade Commission, Department of Justice, attorneys general and other law enforcement agencies;
- The letter is the latest in a series of actions by USDOE to strip critical protections for millions of students and families repaying student loans; and
- USDOE misrepresents the strong work done by the CFPB on behalf of students and families across the country.
As the letter details: “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.”
USDOE’s August 31st letter to the CFPB terminating two memoranda of understanding ended critical protections designed to streamline the supervision of student loan servicers. Today’s letter from the states makes clear this step harms American families and makes it more difficult for the CFPB to assist and protect student borrowers.
As today’s letter states, “[t]he only beneficiaries of the Department’s sweeping rollbacks of consumer protections are the loan servicers and for-profit colleges, and their executives and investors. We suggest the Department of Education focus its efforts on removing the ability of schools selling worthless educational programs to obtain federally guaranteed student loans.”
Today’s letter highlights the strong work the CFPB has done to protect students and families, often in partnership with the USDOE and state attorneys general, including:
- Processing complaints from over 40,000 student loan borrowers;
- With 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;
- 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.
Joining Hawaii and Pennsylvania on today’s letter were California, Connecticut, Delaware, District of Columbia, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia and Washington.
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