Slatery among critics of federal move to block state oversight of student loan collectors

The Trump administration is taking steps to shield student loan collection companies from state regulators, over the objections of consumer advocates and even some Republican attorneys general, reports Politico. Tennessee AG Herbert Slatery is one of them.

Education Secretary Betsy DeVos is preparing to issue a declaration that companies collecting federal student loans are off limits for state lawmakers and regulators. The “notice of interpretation” argues that only the federal government, not the states, has the authority to oversee federal student loan servicers, according to a draft of the document obtained by POLITICO. That includes industry giants like Navient and Nelnet.

Consumer advocates are highly critical. “It’s not surprising that this administration is weighing in on the side of industry over students and taxpayers,” said Whitney Barkley-Denney, legislative policy counsel at the Center for Responsible Lending, a consumer group. “This is just a different verse of the same song we’ve been hearing over the past year” from the Education Department.

The attempt by the Education and Justice departments to help the student loan industry pushes back against growing scrutiny from states — and even as the Trump administration has repeatedly called for giving states more control over education and other issues.

It also comes after the student loan industry has for months lobbied the federal government for protection from the state efforts to crack down on them. Industry groups say that a patchwork of state rules governing student loan servicing will make it more difficult and costly for companies to operate across the country.

The department each year pays nearly $1 billion to a handful of student loan companies that collect the debt on behalf of the federal government. More than 42 million Americans owe roughly $1.4 trillion in outstanding federal student loans.

…The industry’s lobbying efforts last year drew criticism from a group of 25 state attorneys general, led by New York’s Eric Schneiderman. In a letter, the attorneys general urged DeVos “to reject an ongoing campaign by student loan servicers and debt collectors to secure immunity for themselves from state-level oversight and enforcement.”

The Education Department “cannot sweep away state laws that apply to student loan servicers and debt collectors,” said the letter, which was also signed by a handful of GOP attorneys general, including Ken Paxton of Texas, Herbert Slatery of Tennessee and Cynthia Coffman of Colorado.

One Response to Slatery among critics of federal move to block state oversight of student loan collectors

  • David Collins says:

    Whatever happened to the Republican parties battle cry for State’s Rights and the position that local government is in a better position to govern because it is closer to the people? What the totally incompetent DeVos is advocating is big government at its worst. What do you want to bet that some of the principals of the student loan collection agencies are big contributors to Trump and other Republican members of congress?

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