Ed. Dept. Creates Student Loan Enforcement Unit

The Department of Education on Friday announced the creation of a new enforcement office that will watch over postsecondary institutions to “vigorously” ensure that rules are being followed and named an individual that should be familiar to many in the accounts receivable management industry to run the office.

The Office of Enforcement within Federal Student Aid (FSA) — which is run by Richard Cordray, the former Director of the Consumer Financial Protection Bureau — will be led by Kristen Donoghue, who was the CFPB’s Enforcement Director until she resigned from the agency more than two years ago.

“Kristen brings a strong enforcement track record to this role,” said Cordray, in a statement. “Her experienced leadership will drive greater accountability for schools and better educational outcomes for the students we serve.”

Donoghue was one of the CFPB’s original employees and spent nearly a decade working at the Bureau.

The enforcement office will be made up of four divisions:

  • The Administrative Actions and Appeals Services Group, which will suspend and fine schools found of wrongdoing
  • The Borrower Defense Group, which will analyze claims from borrowers defrauded schools
  • The Investigations Group, which will will investigate potential misconduct within schools
  • And the Resolution and Referral Management Group, which will track and resolve complaints about schools

In the release announcing the creation of the enforcement unit, the FSA noted its plan to work closely with the Federal Trade Commission, which last week announced its own crackdown on postsecondary schools engaging in unfair or deceptive acts.

“Vigorously ensuring that schools are adhering to the federal student aid program rules and delivering quality education to students is critical in America’s ability to build back better,” said Under Secretary James Kvaal in the release. “The Administration will prioritize Federal Student Aid’s effective oversight and enforcement of postsecondary schools.”

The enforcement office had first been created back in 2016, but was “deprioritized” during the Trump administration, according to the Education Department.

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