Pending Regs

Ed Department to move to block states from regulating student loan collectors

Greg Nash

The Education Department will propose a policy blocking states from overseeing student loan collectors, Politico reported Monday.

Education Secretary Betsy DeVos is expected to announce that only the federal government has oversight over the companies collecting federal student loans, shielding them from state regulators and lawmakers.

The “notice of interpretation” would protect the collectors from recent state scrutiny, including major companies like Navient and Nelnet. The Education Department currently hires nine collection companies to collect loans, according to Politico.


Collections of federal loans “implicate uniquely federal interests,” a draft of the policy obtained by Politico reads.

More than a dozen states have passed or are debating legislation that would create tougher rules against student loan companies. Student loan companies have lobbied the government to shield them from the states’ actions in recent months.

This isn’t the first action the Trump administration has taken in support of the student loan industry. The Justice Department said in a court filing earlier this year that states can’t take legal action against the companies because the federal government preempts them.

The Education Department also ordered companies working for the agency last year to sidestep responding directly to information requests from third parties, including state regulators, Politico reported.

Advocacy groups slammed the proposed policy, saying that states had stepped up to crack down on the collectors after the Trump administration failed to do so.

“It’s not surprising that this administration is weighing in on the side of industry over students and taxpayers,” Whitney Barkley-Denney, the legislative policy counsel at the Center for Responsible Lending, told Politico. “This is just a different verse of the same song we’ve been hearing over the past year.”

Tags Betsy DeVos Department of Education Student loans
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