Student borrowers need financial justice

Connecticut residents owe $17 billion in student loan debt — averaging over $31,000 per borrower. That is a crushing debt load with serious implications for anyone looking to start a family, open a business, or buy a home. These are not merely statistics to us. They are the stories we hear from our constituents over and over again. Connecticut families need the state and federal governments working together to solve this crisis. 

The U.S. Department of Education wants to make that harder. Inexplicably, they are circling their wagons around bad actor loan servicers, helping them to evade state oversight into abusive practices that have only confounded borrowers' challenges. 

Borrowers rely on private companies with federal government contracts — student loan servicers — to help them navigate complex repayment options and eligibility for forgiveness programs. Unfortunately, student loan servicers have not always acted in the best interests of borrowers. The Department of Education, which is supposed to police these servicers, is simply not doing its job. 

State attorneys general across the country, including in Connecticut, have stepped in to fill that void and have formed coalitions to investigate abuse. These include instances where servicers misdirected borrowers into short-term forbearance options that actually increased their debt, and investigations of servicers who may have deceived borrowers about their options under the Public Service Loan Forgiveness program. 

Until recently, state attorneys general and other state law enforcement agencies were routinely allowed access to federal student loan information, including complaints. States rely on such information to hold loan servicers accountable. 

The Department of Education wants those investigations to stop. Last June, the department abruptly eliminated its longstanding policy allowing access. The department has also improperly attempted to bar servicers from releasing information to state agencies, including the Connecticut Department of Banking, which has authority under state law to enforce important borrower protections. 

It gets worse. The Department of Education has also attempted to reverse a long tradition of dual federal-state enforcement to protect student loan borrowers from unfair and deceptive practices. Without precedent or legal basis, and contrary to congressional intent, the department recently asserted that state laws protecting student loan borrowers are preempted by federal law. 

We stand in staunch opposition to these actions. Under Secretary Betsy DeVos, the Department of Education has failed to protect student loan borrowers against unfair and deceptive industry practices. It has failed to address non-compliance with student loan servicing requirements that its own Office of Inspector General identified, and failed to hold servicers accountable. Now Secretary DeVos wants to sabotage state enforcement too, and we cannot allow that. 

This abdication of oversight is already felt here in Connecticut. In 2018, Congressman Courtney’s office received dozens of requests from constituents whose accounts had been mismanaged. One individual was assured by her loan servicer that she had nearly 100 payments left to make on her loan, when in reality she had never missed a payment and was well on her way to having her student loan fully paid off. Others were falsely told they didn’t qualify for Public Service Loan Forgiveness. Others had extra payments misapplied, or were harassed by servicers even after having their loans discharged. 

Financial justice for student borrowers shouldn’t necessitate the intervention of elected officials, but that’s the atmosphere the Department of Education has encouraged under Secretary DeVos. Wth less oversight, some servicers feel emboldened to financially abuse their customers. 

When pushed by Congressman Courtney during a recent congressional hearing to explain the department's shift, Secretary DeVos offered no real justification. She claimed— unconvincingly — that federal oversight preempts any state role. In fact, Congress made its intent clear when it directed the Department of Education in the 2019 appropriations bill to respond to state requests for information within 10 days of receipt. Congress also required that all such requests be publicly listed on the department's website. Secretary DeVos has blatantly disregarded the will of Congress. 

When students take out loans to pursue higher education they do so to advance their careers and get ahead in life. When loan servicers fail to help borrowers navigate complex repayment plans or engage practices that harm borrowers, we all lose. That's an outcome we are not prepared to accept.

William Tong is Connecticut's attorney general. U.S. Rep. Joe Courtney represents Connecticut's Second Congressional District. 

 

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