DeVos to Assert that Only Department of ED, Not States, Can Regulate Student Loan Servicers

POLITICO has reported that Education Secretary Betsy DeVos plans to take actions that would prevent state regulators from exercising authority over student loan servicers. According to POLITICO, which obtained a draft of the “notice of interpretation,” DeVos argues that only the federal government, not the states, has the authority to oversee federal student loan servicers. 

Last year DeVos also told the Consumer Financial Protection Bureau that the Department of Education (ED) would be terminating the Memoranda of Understanding (MOUs) between ED and the CFPB regarding the sharing of information in connection with oversight of federal student loans.  The notice to the CFPB was authored by Kathleen Smith, acting assistant secretary for postsecondary education and Dr. A. Wayne Johnson, Chief Operating Officer, Federal Student Aid. The letter said,

“Our goals are to ease the burden for borrowers and to enhance the efficiencies of our servicers -- not to complicate the federal student loan process with potentially inaccurate and inconsistent directives. The department entered into the [memorandums of understanding] in reliance on the CFPB's commitment to helping each agency fulfill its respective duties. Instead, the CFPB is using the department's data to expand its jurisdiction into areas that Congress never envisioned. This latest expansion is characteristic of an overreaching and unaccountable agency, and it has led the Department to terminate the MOUs in order to ensure a fair and consistent enforcement of Title IV requirements and the efficient resolution of borrower complaints. The Department takes exception to the CFPB unilaterally expanding its oversight role to include the contracted federal loan servicers.” 

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