ATTORNEY GENERAL HERRING CALLS ON SECRETARY DEVOS TO REJECT STUDENT LOAN SERVICING INDUSTRY'S DEMAND FOR IMMUNITY FROM OVERSIGHT AND ENFORCEMENT

~ Attorney General Herring joins a bipartisan coalition of 25 state attorneys general opposing improper industry attempt to sideline state regulators amid student loan crisis ~

RICHMOND (October 24, 2017) - Attorney General Mark R. Herring  today joined a bipartisan coalition of 25 fellow attorneys general in a letter to Secretary Betsy DeVos urging the U.S. Department of Education to reject the campaign by 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, far reaching problems in the student loan industry and won tens of millions of dollars in settlements for student borrowers.

In response, leading industry groups are lobbying the Department of Education to block or "preempt" state-led efforts to combat potential and ongoing abuses by student loan servicers. As the AGs explain in today's letter, the Department lacks the legal authority to block state oversight and any attempt to sideline effective state oversight amid the mounting student loan crisis would only put students and borrowers at risk.

"More than one million Virginia student borrowers have a total of more than $30 billion in outstanding student loan balances, and that's why the work my fellow state attorneys general and I do to put tens of millions of dollars back into the pockets of these students is so important," said Attorney General Herring. "We cannot allow student loan servicers to sidestep state law and deny students and borrowers these vital protections from student loan abuses, and I promise I'll continue to fight for Virginia students and their families."

 

Major state-led investigations of student loan servicers have recently included:

• Education Management Corporation: The investigation uncovered that the school misled students about program costs, graduation rates, and job placement rates. As part of the multi-state settlement, state attorneys general obtained over $100 million in loan forgiveness. 
• Devry University: The investigation revealed that DeVry lured students with ads that exaggerated graduates' success in finding employment at graduation and contained inadequately substantiated claims about graduates' salary success. The FTC and other state regulators obtained over $100 million in refunds and debt relief for former DeVry students.
• Aequitas Capital Management: The investigation conducted by the DOE 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 multi-state settlement provided $183 million in student loan relief for 41,000 students nationwide. 

Click here to read the letter sent today by the attorneys general.

The attorneys general explain in their letter 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."

Additionally, the attorneys general point out that "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."

In addition to Attorney General Herring, the bipartisan letter sent today included signatures of the attorneys general and other top state officials from California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Massachusetts, Maryland, Maine, Minnesota, Montana, New York, North Carolina, Oregon, Rhode Island, Tennessee, Texas, Vermont, Washington and the District of the Columbia.

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