WASHINGTON, D.C. – U.S. Secretary of Education Betsy DeVos recently announced that the Department will stop working with the Consumer Financial Protection Bureau (CFPB) in oversight cases of student loan fraud. The partnership to share information between the two federal agencies had been in place since 2011 and has been responsible for providing students with relief after being defrauded by higher education institutions and bad student loan servicing practices. The decision to end this partnership will severely reduce oversight of the industry and hold it less accountable to the public.
Center for Responsible Lending (CRL) Policy Counsel Whitney Barkley-Denney released the following statement:
Secretary DeVos’ decision to sever this important partnership is part of a pattern of decisions that ignores the interests of struggling students and moves the Department of Education further away from improving federal higher education loan programs and servicing. It also deliberately undermines the CFPB from fulfilling its mission of protecting consumers.
The Bureau has been at the forefront of student protections against bad for-profit colleges and student loan servicers—we’ve seen it firsthand with the agency’s action against ITT Tech, Corinthian Colleges, and Navient student loan servicing. The agreement between the CFPB and the U.S. Department of Education to investigate student loan complaints is paramount to ensuring borrowers aren’t mistreated by servicers. The CFPB has, within its congressional authority, been instrumental in exposing and remedying systemic wrongdoing by the student loan servicing industry.
As the federal government continues to prioritize private interests, state actors are and should continue to be an important line of defense for defrauded students. States can address deception by licensing student servicers within their states, which can help in prohibiting misrepresentations, payment misapplications, and false credit reports.
Based on her track record and the Trump Administration’s lack of compassion toward students, we are doubtful that this Department, under Secretary DeVos’ leadership, will produce results that defend borrowers and taxpayers from predatory institutions and services.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Ricardo Quinto email@example.com.