Pennsylvania’s attorney general is leading a charge against the U.S. secretary of education for the second time in two months.
AG Josh Shapiro is asking Secretary Betsy DeVos to halt a “systematic rollback of critical student loan protections for student borrowers.”
If Secretary DeVos won’t protect students from these kinds of scams, we will.
Attorney General Josh Shapiro
“With a rising number of students burdened by college loan debt or in default, this is exactly the wrong time for the Department of Education to abandon its responsibility to protect students from deceptive practices by for-profit schools and federal loan servicers,” Shapiro said in a statement Tuesday. “Secretary DeVos is bending her own department’s rules to help lenders and borrowers who rip off Pennsylvania families. If Secretary DeVos won’t protect students from these kinds of scams, we will.”
A letter from Shapiro and attorneys general from 18 other states to DeVos addresses issues with the Department of Education, terminating two memoranda with the Consumer Financial Protection Bureau.
“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,” the letter said.
Penn State, the largest university in the state, has concerns.
“The recent actions by the Department of Education do not impact students’ ability to borrow, but could impact students during repayment,” said Anna Griswold, assistant vice president for Undergraduate Education and executive director for Student Aid. “Taking oversight away from the Consumer Financial Protection Bureau leaves students without protection or an agency with which to file complaints if they are mistreated by loan collectors. There would be no accountability for unscrupulous loan services that do not adhere to regulatory provisions related to student borrower rights during repayment. This is a real concern.”