State regulators, including those that specifically regulate collection agencies, have asked the Department of Education to “cease obstructing or discouraging state regulation” by formally taking steps to prove it is serious about not blocking attempts from state regulators to access records needed to investigate student loan servicers and debt collectors.
The letter was written by the Conference of State Bank Supervisors and the North American Collection Agency Regulatory Association and sent to the Secretary of Education earlier this week.
While applauding steps that the Education Department has taken so far following the transition from former Secretary Betsy DeVos to new Secretary Miguel Cardona, the regulators have asked the department to take additional action they deem necessary to “fully return” to a policy of working together to protect student loan borrowers. Timing is of the essence, the regulators noted in their letter, because forbearance programs on student loans put into place during the COVID-19 pandemic are set to end in the coming months.
The CSBS and NACARA said they were “pleased” with announcement made back in May that the Education Department was revising a policy put into place during the Trump Administration that blocked access for state regulators to records needed to investigate student loan servicers and private collection agencies. But the Education Department has to go beyond revising the policy and completely rescind it, the regulators said in their letter. Additionally, the Education Department should formally recognize that state regulators are “independently authorized” to access records possessed by servicers and collectors, the groups claim.
“CSBS and NACARA urge the Department to rescind the 2018 preemption notice and formally recognize that state oversight and regulation is fully applicable to federal student loan servicers and debt collectors, entirely appropriate, and not in conflict with the purpose of the [Higher Education Act],” they wrote.