Department of Education revises student loan policy; State R …
In a letter to the US Department of Education (DOE) this week, state financial regulators expressed support for his new legal interpretation regarding state regulation of federal student loan services and collection agents, according to a Press release.
In a letter to DOE, the Conference of State Bank Supervisors (CSBS) and the North American Association of Collection Agencies Regulatory (NACARA) have expressed strong support for the legal interpretation made in August, which recognizes the authority of the State and supports state and federal cooperation.
The legal interpretation makes it clear that neither state laws requiring licensure nor state laws imposing positive obligations would be preempted by federal law, according to the letter.
In addition to expressing support, CSBS and NACARA encouraged the DOE to reinstate provisions in its service contracts to require student loan managers and federal debt collectors to comply with federal law and regulations. the state. These provisions, removed as part of the Trump administration’s policy, promote cooperative federalism, which improves the service of student loans for the benefit of student borrowers and their families.
The CSBS and NACARA have called for the return of state authority to regulate federal student loan services and debt collectors, ACA International previously reported.
CSBS and NACARA also sent a letter to Education Secretary Miguel Cardona in August, applauding recent DOE steps to recognize state authority, but calling for more action to end to pre-emption on state regulation.
Under the Trump administration, the DOE enacted policies that prevented state financial regulators from overseeing federal student loan services and providing consumer protections available under state law.
State regulators focused on a request from the DOE “to rescind a notice published in 2018 that largely prevails over state regulation of federal student loan services, to formally recognize that state regulation of student loans” federal students is independent of federal law and allow state financial regulators to access the federal student loan service[s] and recovery file[s]. “
Federal student loan payments are currently on hold until January 2022 due to the COVID-19 pandemic. State regulators’ request to DOE to reverse the preemption policy is now important to ensure borrower protection once payments are resumed, the ACA previously reported.
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