Shapiro: “Rolling back borrower protections hurts Pennsylvanians”
HARRISBURG — Attorney General Josh Shapiro today joined a multistate letter with 20 other attorneys general that expresses “profound concern” to the U.S. Department of Education for abdicating its responsibility to millions of student loan borrowers and their families across the country by revoking critical reforms designed to help students avoid default and curtail loan servicer misconduct.
The multistate letter signed by Attorney General Shapiro and the other attorneys general was sent today to Education Secretary Betsy DeVos in opposition to the Department’s recent rollback of guidance intended to protect student loan borrowers and reform the student loan servicing industry.
“These reforms were put in place to protect consumers after years of abuse in the student loan industry documented by attorneys general,” said Attorney General Shapiro. “Rolling back borrower protections hurts Pennsylvanians but won’t stop my office from holding companies accountable when they mislead consumers. Politics should not be the reason to stop these common-sense reforms that will help students.”
The guidance, issued by the Department of Education last year, centered on helping borrowers get accurate information about their loans and repayment options, ensuring the consistency of service provided by student loan servicers, increasing servicer accountability, and enhancing transparency. Critically, these reforms aimed to improve borrowers’ access to affordable loan repayment plans designed to help borrowers in distress avoid default. But the Department’s action earlier this month has instead left student loan borrowers vulnerable to poor practices and abuses that the servicing reforms were intended to prevent.
As explained in today’s letter, investigations and enforcement actions undertaken by state attorneys general and the CFPB have repeatedly uncovered student loan servicing misconduct. In January 2017, attorneys general from several states along with the Consumer Financial Protection Bureau (CFPB) sued Navient, one of the largest servicers of federal and private student loans, for widespread abuses in originating, servicing, and collecting upon defaulted student loans.
According to the letter, borrowers struggle under the weight of their student loan debt and federal student loan default rates are on the rise. In 2015, the CFPB estimated that more than 25 percent of student loan borrowers were delinquent or in default on a student loan.
“Many such borrowers would benefit greatly from entering income-driven repayment plans but are prevented from doing so by student loan servicer misconduct and misinformation,” the letter from the attorneys general states.
Joining today’s letter are the attorneys general of Massachusetts, Illinois, California, Connecticut, Hawaii, Iowa, Kentucky, Maine, Maryland, Minnesota, Mississippi, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia, as well as the Executive Director of the Office of Consumer Protection of Hawaii.
