Press Release  AG Healey Calls Out Education Secretary DeVos for Revoking Critical Student Loan Servicing Reforms

BOSTON — Looking to restore critical reforms designed to help students avoid default and curtail loan servicer misconduct, Attorney General Maura Healey has called out the U.S. Department of Education for abdicating its responsibility to millions of student loan borrowers and their families across the country.   

The multistate letter – co-sponsored by AG Healey and Illinois Attorney General Lisa Madigan, and joined by 19 attorneys general and the Office of Consumer Protection of Hawaii – was sent today to Education Secretary Betsy DeVos in opposition to the Department’s recent rollback of guidance intended to protect student loan borrowers and reform the student loan servicing industry.

“Secretary DeVos’ decision to derail common sense student loan servicing reforms is just the latest example of selling out American students and families,” AG Healey said. “My Student Loan Assistance Unit works everyday with student borrowers who are struggling to repay their loans. With loan defaults on the rise, this rollback of student protections comes at the worst possible time. We are urging the Secretary to change course immediately.”

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. Critically, 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.

As explained in today’s letter, investigations and enforcement actions undertaken by state attorneys general and the CFPB have repeatedly uncovered student loan servicing misconduct. In 2016, AG Healey secured a $2.4 million settlement with ACS Education Services, a national student loan servicer, over allegations that it failed to properly process struggling borrowers’ applications for income-driven repayment plans, among other violations of state and federal law. In January 2017, attorneys general from Illinois and Washington, along with the Consumer Financial Protection Bureau (CFPB), sued Navient, one of the largest servicers of federal and private student loans, for widespread abuses in originating, servicing, and collecting upon defaulted student loans.

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.

Addressing fraud and abuse in student lending has been a top priority for AG Healey since taking office, whether taking predatory for-profit schools to court, changing the practices of student loan servicers, going after unlawful student loan “debt relief” companies, updating the U.S. Department of Education’s borrower defense discharge regulations or helping thousands of struggling Massachusetts student borrowers find more affordable repayment solutions or secure debt relief.

AG Healey’s first-in-the-nation Student Loan Assistance Unit has helped thousands of student borrowers explore their loan repayment options, enroll in income-driven repayment plans, get loans out of default, apply for discharges, and resolve billing disputes with loan servicers. The unit frequently hears from students and parents who are deeply in debt and have not received the necessary guidance from their student loan servicers to make sound repayment decisions.  Many of these borrowers face ballooning loan balances, escalating monthly payments, credit harm, wage garnishment, tax refund interception, or large collection fees.

Massachusetts borrowers who are looking for student loan help or information  should visit the AG’s Student Lending Assistance page or call the Student Loan Assistance Unit Hotline at 1-888-830-6277.  Borrowers are strongly cautioned against paying fees to private third party student loan “debt relief” companies for help enrolling in federal income-driven repayment plans or consolidating federal student loans. 

Joining AG Healey in today’s letter are the attorneys general of Illinois, California, Connecticut, Hawaii, Iowa, Kentucky, Maine, Maryland, Minnesota, Mississippi, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia, as well as the Executive Director of the Office of Consumer Protection of Hawaii.

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