Tug-of-War on Loan Servicing

"The Department of Education’s announcement in May that it would rescind extensive requirements for loan servicers previously issued by the Obama administration was a red flag to skeptics who already doubted Education Secretary Betsy DeVos's commitment to protecting student borrowers,"according to Inside Higher Ed.

"Those requirements pressed servicers to be more active guides for borrowers seeking to pay off their student loan debt. And they said servicers would be judged based on outcomes for borrowers as well as the effectiveness of communications to borrowers, including special outreach to those at risk of default.

Despite assurances to the contrary from DeVos, many state lawmakers and regulators over the past year have responded by strengthening their own oversight regimes -- in one case, by largely adopting the Obama requirements.

The drive for tougher oversight in many states has formed the backdrop to a dispute between servicers and regulators, with DeVos in the middle.

Now both sides are waiting for the secretary to weigh in one way or another -- to recognize that federal policy pre-empts state regulations or, if attorneys general have their way, to stay out of their oversight of the sector.

Unlike state laws governing campus policies, though, the new regulations of servicers affect entities operating across state lines, drawing complaints from entities that say they shouldn’t have to comply with a patchwork of federal and state regulations."

NASFAA's "Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 11/28/2017


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