"The U.S. Justice Department has filed papers arguing Massachusetts' attorney general cannot pursue claims under state law that one of the nation's largest student loan servicers undermined a federal debt forgiveness program," Reuters reports.
"Loan servicer Pennsylvania Higher Education Assistance Agency seized on the department's filing to argue during a court hearing on Wednesday in Boston that Massachusetts Attorney General Maura Healey's lawsuit should be dismissed.
The student loan servicing industry has lobbied the U.S. Department of Education under Republican President Donald Trump to take steps to block state actions against servicers.
The Justice Department, representing the Education Department, argued in a filing on Monday that federal law including the Higher Education Act, pre-empted Healey's state-law claims. Healey, a Democrat, criticized the filing.
'We sued to hold the company accountable for cheating students and families under Massachusetts law and the Department of Education has no business in this case,' Healey said in a statement.
In August, Healey sued PHEAA, which does business as FedLoan Servicing and manages over a fourth of the nation's $1.4 trillion student loan debt on behalf of various lenders.
The lawsuit accused PHEAA of deceptive practices that caused public servants to lose benefits and financial assistance under two federal programs, including one that forgives student loans after about 10 years of public-service work."
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Publication Date: 1/12/2018