Release date:
3/15/2018
Legislation Would Dismantle State Oversight of Student Loan Industry – Despite State AGs’ Critical Role in Holding Industry Accountable and Protecting Students from Fraud and Abuse
(RALEIGH) Attorney General Josh Stein today joined with a bipartisan group of Attorneys General to urge Congress to reject legislation that would block states from preventing and combatting fraud and abuse by the student loan industry. “More than a million North Carolinians have student loans,” said Attorney General Stein. “My office has investigated and won settlements to protect these students from unscrupulous lenders and servicers – work that we must be able to continue to do. I am calling on Congress to preserve my ability to fight on behalf of the 58 percent of North Carolina graduates who have debt.”
The Higher Education Act reauthorization (H.R. 4508, also known as the PROSPER Act), includes language to preempt state level oversight of private companies that originate, service, or collect on student loans. As drafted, the language attempts to immunize the student loan industry from the state-level enforcement and reforms underway across the country.
Describing the language as “an all-out assault on states’ rights and basic principles of federalism,” the letter urges Congress to strip the language from House bill and to omit it from consideration in the Senate.
This follows a similar bipartisan effort in October, in which state officials from across the United States called on the U.S. Department of Education to reject improper industry efforts to achieve similar results.
Attorney General Josh Stein was joined by the Attorneys General of California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Montana, Nebraska, New Mexico, New Jersey, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Utah, Vermont, Virginia, Washington, and the District of Columbia, as well as the Executive Director of the Hawaii Office of Consumer Protection.
Major state-led investigations of student loan abuses have recently included:
- Charlotte School of Law: Attorney General Stein was successful in urging the U.S. Department of Education to extend the closed school discharge rule to help approximately 300 students obtain relief on their loans from the now-defunct school.
- Corinthian Colleges: State attorneys general were critical in uncovering widespread misconduct at the now defunct Corinthian Colleges and working to obtain relief for repayment of their student loans for tens of thousands of defrauded students nationwide.
- Education Management Corporation: The investigation uncovered that the school misled students about program costs, graduation rates, and job placement rates. As part of the multi-state settlement, State Attorneys General obtained over $100 million in loan forgiveness, including 2,881 North Carolinians who received $4.1 million in student debt forgiveness.
- Navient Corporation: Attorneys General have brought actions against Navient, the largest servicer of federal student loans, and certain of its subsidiaries for engaging in deceptive student loan servicing practices. Other states continue to investigate Navient.
Contact:
Laura Brewer (919) 716-6484
###