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AGs Oppose PROSPER Act Over Ban on State Oversight of Loan Servicers

March 16, 2018
 
 

A bipartisan group of 30 attorneys general signed on to a letter Thursday opposing House legislation to reauthorize the Higher Education Act over a provision that would bar states from regulating student loan servicers.

The letter comes after multiple state officials last week criticized Education Secretary Betsy DeVos over a pre-emption notice that declared the federal government holds exclusive authority to oversee loan servicing companies.

A provision in the PROSPER Act, as House Republicans' HEA update is known, would made explicit in federal law the same principle.

The attorneys general argued in their letter that state-led investigations have revealed abuses by both for-profit education companies and large servicers.

“Gutting state-level protections for students would be disastrous -- putting the financial interests of the loan industry ahead of the welfare of student borrowers in New York and across the country,” said New York attorney general Eric Schneiderman. “States have a fundamental right to protect our residents from financial fraud and abuse. At a time when millions of Americans are struggling with student debt, we need more cops on the beat -- not fewer. Our bipartisan coalition of attorneys general is sending a clear message: the federal government should be working hand in hand with states to combat student loan fraud and abuses, not trying to sideline its state partners.”

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