Consumer Confidential: States brace for battle with Trump administration over student loans

David Lazarus, Los Angeles Times on

Published in Business News

Ask Republican politicians how they feel about gun control, and they'll say this is a matter for states to decide. "I think we need to respect federalism and respect local jurisdictions," House Speaker Paul D. Ryan insisted just last week.

But ask Republicans about protecting people from being ripped off by student-loan debt collectors, and they'll sing a completely different tune.

A confidential draft memo drawn up by the U.S. Department of Education lays out the case for why states, including California, should abandon their own laws for student-loan servicers and let the feds allow these for-profit companies to skate by with considerably less oversight.

I got my hands on a copy of the memo. It doesn't mince words in telling California and other states to back off.

"State regulation of the servicing of Direct Loans impedes uniquely Federal interests," it declares.

The memo says the federal government has jurisdiction when it comes to "streamlining student lending and saving taxpayer dollars."

This is an extraordinary stance considering the sole purpose of these state laws is to protect people burdened with student loans from being muscled by overzealous debt collectors -- a goal that, one would think, is shared by federal authorities.

But under President Trump's appointee as Education secretary, Betsy DeVos, the priority seems to be safeguarding the loan-servicing industry, not consumers.

California officials say the Education Department's memo is aimed squarely at the Golden State, which has enacted some of the most comprehensive rules for student-loan servicers.

And they say they're not going to just roll over.


swipe to next page

--Sponsored Video--


blog comments powered by Disqus

Social Connections


Daddy's Home Cathy Nick Anderson Brilliant Mind of Edison Lee Marshall Ramsey Signe Wilkinson