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Reports: Trump Administration to Declare Loan Servicers 'Off-Limits' to State Regulators

February 27, 2018
 
 

The Department of Education is planning to issue a statement that only federal agencies, and not state regulators, have oversight authority over student loan servicing entities, according to separate reports.

Loan servicers have sought such a declaration from Education Secretary Betsy DeVos since last year. But that demand received strong pushback from state attorneys general, including several Republican officials. Bloomberg and Politico first reported this week that the department plans to block state regulation of servicers, which handle borrowers' payment of student loan debt and provide advice on options like repayment plans.

A department spokeswoman did not respond to a request for comment about those reports.

Democratic officials at the state level have filed a number of lawsuits against loan servicers in recent years, alleging shoddy service and illegal practices. The Consumer Financial Protection Bureau has also gotten involved. The Department of Education said last year it would end two information-sharing agreements with CFPB for oversight of private entities like loan servicers involved in federal student aid programs.

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