AFT Applauds State Attorneys General for Suing Education Secretary for Delay in Regulations to Protect Student Loan Borrowers

WASHINGTON—Statement by American Federation of Teachers President Randi Weingarten on lawsuit by 18 state attorneys general against Education Secretary Betsy DeVos for delaying regulations to protect student loan borrowers:

“The federal government has a moral and legal obligation to act as a watchdog to protect students from rip-off artists and frauds, but Betsy DeVos and this administration continue to side with predatory for-profit schools over students being defrauded. We applaud today’s action by 18 attorneys general to prevent DeVos from ripping apart these rules that protect students who just want to get a decent education that can lead to a good job. This action is exactly what we called for in an April letter urging attorneys general, state officials and the Consumer Financial Protection Bureau to step in to preserve these rules, clean up the mess left behind by student loan servicers’ misconduct, and prevent a financial catastrophe on the scale of the mortgage crisis.”

From the AFT’s letter to the CFPB and state attorneys general:

“We write to express our outrage over the recent decision the U.S. Department of Education to abdicate its responsibility to protect student loan borrowers and provide meaningful oversight of its contracted student loan services. Now that the primary regulator has abandoned its most basic commitment to more than 40 million student loan borrowers, it is incumbent on state attorneys general, state banking regulators and the Consumer Financial Protection Bureau to take immediate action in order to clean up the mess left behind and prevent a financial catastrophe on the scale of the mortgage crisis. … We therefore call on the bureau, in coordination with the state attorneys general and state banking regulators, to fill the void left by Secretary DeVos and the Department of Education by:

1. Committing to an industrywide investigation that prioritizes making harmed consumers whole, by reviewing numerous complaints lodged against every servicer, and suing companies that break the law. Regulators must ensure servicers and their executives are held fully accountable and should avoid settlements that allow companies to operate business as usual.
    
2. Developing enforceable nationwide servicing standards immediately. Federal and state regulators should use their considerable authority to ensure servicers adhere to clear standards that protect borrowers against abuse. Already, the bureau has indicated its intent to develop borrower protections. We are eager to see these protections become a reality and will vigorously defend them against the inevitable attacks.
    
3. Devoting additional staff to policing student loan servicers to ensure compliance with federal and state consumer protection laws, and monitoring the student loan market more thoroughly.”