AG Jepsen: Conn. Joins Bipartisan Coalition Opposing Industry Effort to Preempt State Oversight, Enforcement on Student Loan Debt
Attorney General George Jepsen today joined with a bipartisan coalition of attorneys general from across the country in a letter urging U.S. Department of Education Secretary Betsy DeVos to reject a campaign by the student loan servicers and debt collectors to dismantle state oversight of the student loan industry.
In recent years, state attorneys general have investigated a number of significant problems in the student loan industry and have won settlements returning millions to student borrowers. In response, industry groups have begun lobbying the Department of Education to preempt state-led efforts to curb potential and ongoing abuses by student loan servicers.
"When it comes to enforcement, attorneys general and state regulators are nimble, capable, experienced and able to work together with each other and with federal partners to protect student borrowers," said Attorney General Jepsen. "With so many struggling under the weight of student debt, and given the glaring abuses within the industry that we have sought to address over the last several years, now is certainly not the time for less enforcement."
In their letter to Secretary DeVos, the attorneys general explain that the industry requests would "defy the well-established role of states in protecting their residents from fraudulent and abusive practices, plainly exceed the scope of the Department's lawful administrative authority, and would needlessly harm the students and borrowers at the core of the Department's mission."
"State enforcement agencies have long been at the frontlines in protecting their citizens from fraud, deceptive conduct; and unfair business practices, including by financial service companies, debt collectors, and others," the attorneys general wrote. "Indeed, such actions reflect fundamental states' rights and fall squarely within the historic police powers reserved to the states."
Connecticut has taken an active role in investigating abuses, particularly in the for-profit college industry. A multistate investigation into the Education Management Corporation uncovered that the school misled students about program costs, graduation rates, and job placement rates. As part of the multistate settlement, state attorneys general obtained over $100 million in loan forgiveness, including $364,990 for Connecticut students.
Additionally, Connecticut has taken part in multistate efforts involving the now-defunct Corinthian College. An investigation conducted by the Department of Education and the California Attorney General's Office found that Corinthian College misrepresented graduates' employment success in connection with some of its programs, making certain students eligible for discharge of their federal student loans managed by Aequitas Capital Management, Inc. The resulting multistate settlement provided $183 million in student loan relief for 41,000 students nationwide.
In addition to Connecticut, and led by the New York Attorney General, other states joining this letter include California, Colorado, Delaware, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Massachusetts, Maryland, Maine, Minnesota, Montana, North Carolina, Oregon, Rhode Island, Tennessee, Texas, Virginia, Vermont, Washington and the District of Columbia.
Assistant Attorneys General John Langmaid and Joseph Chambers, head of the Finance Department, are assisting the Attorney General with this matter.
Please click here to view this letter.
Jaclyn M. Severance