Student Defense Calls on Department of Education to End Policy of Stonewalling State Investigations
WASHINGTON, DC – Student Defense today called on the U.S. Department of Education to resume sharing student loan data and complaints with states. Cutting off this flow of information, as former Secretary Betsy DeVos did in 2018, helped to protect predatory schools and abusive student loan servicers, while undercutting states’ ability to enforce consumer protection laws.
“Secretary Cardona can make a clean break from the misguided policies of his predecessor, and instead work with state attorneys general to ensure bad actors do not escape accountability. DeVos’s justification for withholding these complaints simply doesn’t stand up to scrutiny,” said Student Defense Vice President and Chief Counsel Dan Zibel. “It is all too clear her true goal was shielding predatory colleges and abusive loan servicers from accountability. States are natural allies in the fight to protect students, and Secretary Cardona should waste no time in reestablishing this vital flow of information.”
State attorneys general enforce state consumer protection laws, and are an important check on predatory companies seeking to take advantage of students and borrowers. Under previous administrations, the Department of Education routinely shared student loan data with state law enforcement agencies investigating misconduct. Aided by this information, state attorneys general have recovered millions of dollars in relief for students harmed by loan servicers and predatory schools.
During Secretary DeVos’s term in office, the Department of Education worked to obstruct investigations into student loan servicers by prohibiting servicers from responding to requests by state and federal law enforcement. The Department also claimed--in a legal interpretation that has been rebuked and rejected by several appellate courts--that federal law preempts state consumer protection statutes regarding loan servicers. That interpretation was part of an attempt to shut the courthouse doors on borrowers and state attorneys general seeking to enforce laws prohibiting misleading and deceptive practices. Student Defense has previously called on the Department to repeal that interpretation in a 100 Day Docket proposal.
The stonewalling tactics did not stop with states: in 2018 the Department also terminated a statutorily-required memorandum of understanding with the Consumer Financial Protection Bureau, which made it harder for the two agencies to share information regarding student borrower complaints or servicer practices.