Student Defense Applauds Department of Education’s Revocation of DeVos Notice Preempting State Oversight, Enforcement Against Loan Servicers
FOR IMMEDIATE RELEASE:
August 9, 2021
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Student Defense Applauds Department of Education’s Revocation of DeVos Notice Preempting State Oversight, Enforcement Against Loan Servicers
Student Defense applauds the Department of Education’s withdrawal of a DeVos-era Notice of Interpretation that severely limited states’ ability to regulate and take enforcement action against student loan servicers. Student Defense called for the withdrawal of the Notice in its 100 Day Docket policy initiative, which laid out a number of key policy recommendations the Biden Administration could enact — without the need for federal legislation — to help alleviate the burden on borrowers affected by the student debt crisis.
The Department replaced the DeVos Notice by issuing a new Notice of Interpretation in the Federal Register that relies heavily on two landmark federal appellate court cases argued by Student Defense Vice President and Chief Counsel Dan Zibel. Those decisions rejected the position asserted in the Notice and cemented the rights of borrowers and state attorneys generals to file lawsuits against servicers that affirmatively make misrepresentations to borrowers. In both cases, borrowers had their cases against servicers dismissed, when the servicers argued the position promoted by then-Secretary Betsy DeVos. Student Defense, acting as appellate counsel, obtained reversals in both cases.
The rulings have since been relied upon by state and federal courts across the country, cementing the position that no student servicer can duck state law accountability from lies or misrepresentations to borrowers.
“The repeal and replacement of the DeVos Notice is a major win for student borrowers and opens the door to greater oversight of student loan servicers who leveraged the Notice in court to evade accountability,” said Student Defense Vice President and Chief Counsel Dan Zibel. “We hope this move signals the Department of Education is moving quickly towards expanding accountability across student lending and better protecting student borrowers from being defrauded — especially during our recovery from the pandemic.”