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Attorney General Janet Mills calls on Secretary DeVos to reject student loan servicing industry?s demand for immunity from state law oversight and enforcement
October 24, 2017
OFFICE OF THE ATTORNEY GENERAL
FOR IMMEDIATE RELEASE
CONTACT: Andrew Roth-Wells Telephone: (207) 626-8887
Attorney General Janet Mills calls on Secretary DeVos to reject student loan servicing industry?s demand for immunity from state law oversight and enforcement
Mills joins bipartisan attorneys general from 25 states in letter to DeVos to oppose improper industry attempt to sideline state regulators amid student loan crisis
AUGUSTA ? Attorney General Janet Mills today joined a bipartisan coalition of Attorneys General and officials representing 25 states in urging Education Secretary Betsy DeVos to reject the campaign by student loan servicers and debt collectors to dismantle state oversight of the student loan industry. In recent years, state AGs have investigated significant problems in the student loan industry and have won settlements that returned tens of millions of dollars to student borrowers.
In response to that effort, industry groups are lobbying the Department to block or ?preempt? state efforts to combat abuses by student loan servicers. As the AG?s explain in a letter today, the Department lacks the legal authority to block state oversight and any attempt to sideline state oversight amid the mounting student loan crisis would only put students and borrowers at greater risk.
?Protecting students and their families from abuses by the student loan industry is something we can all agree on regardless of party,? said Attorney General Mills. ?State attorneys general from across the country have put tens of millions of dollars back into the pockets of student borrowers, and these vital protections must remain in place.?
Major state-led investigations of student loan servicers recently include:
? 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 Corinthians 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.
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.?
Nationally, student debt has surpassed credit card debt, reaching $1.4 trillion last year. Maine has the 14th highest average debt for graduates in the nation at $30,000.
Attorney General Janet Mills recently used settlement funds from the Standard & Poor?s lawsuit to expand UMF?s Peer-to-Peer Financial Literacy Program to the entire University of Maine system to help students to avoid debt. The program started as a pilot project at UMF in 2013 by training students to help their fellow students understand their own finances and how to make responsible financial decisions. With the funds from the Attorney General?s Office the University of Maine System will train students as Peer Financial Educators and eventually reach out to middle and high school and community college students.
The Maine Consumer Credit Protection Bureau has also produced a comprehensive handbook for families considering how to pay for college. The ?Downeaster Commonsense Guide to Student Loans? can be downloaded from their website.
