Vermont Business Magazine Attorney General Donovan today joined a multistate letter calling out the USDepartment of Education for abdicating its responsibility to millions of student loan borrowers. The Department is revoking critical reforms designed to help students avoid default and curtail loan servicer misconduct. The multistate letter – co-sponsored by Massachusetts Attorney General Maura Healey and Illinois Attorney General Lisa Madigan, and joined by 19 attorneys general and the Office of Consumer Protection of Hawaii – was sent to Education Secretary Betsy DeVos in opposition to the Department’s recentrollback of guidanceintended to protect student loan borrowers and reform the student loan servicing industry.
The guidance, issued by the Department of Education last year, centered on helping borrowers get accurate information about their loans and repayment options, ensuring the consistency of service provided by student loan servicers, increasing servicer accountability, and enhancing transparency. These reforms aimed to improve borrowers’ access to affordable loan repayment plans designed to help borrowers in distress avoid default. But the Department’s action earlier this month has instead left student loan borrowers vulnerable to poor practices and abuses that the servicing reforms were intended to prevent.
According to the letter, borrowers struggle under the weight of their student loan debt and federal student loan default rates are on the rise. In 2015, the CFPB estimated that more than 25 percent of student loan borrowers were delinquent or in default on a student loan. “Many such borrowers would benefit greatly from entering income-driven repayment plans but are prevented from doing so by student loan servicer misconduct and misinformation,” the letter states.
Joining today’s letter are the attorneys general of Vermont, Massachusetts, Illinois, California, Connecticut, Hawaii, Iowa, Kentucky, Maine, Maryland, Minnesota, Mississippi, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Virginia, Washington, and the District of Columbia, as well as the Executive Director of the Office of Consumer Protection of Hawaii.
Source: Vermont AG.April 24, 2017