Pennsylvania Attorney General Josh Shapiro led a coalition demanding the Education Department to stop undermining critical protections for student loan borrowers.
On Tuesday, the coalition of Attorneys General (AG) from 18 states sent a letter to Education Sec. Betsy DeVos. The AGs expressed concern about the termination of two Memoranda of Understanding (MoU) with the Consumer Financial Protection Bureau (CFPB).
Education Department’s termination of MoUs with CFPB
Shapiro and his fellow AGs told DeVos that the agency’s August 31 letter about the MoUs is “troubling.” The Education Department’s decision is “incorrect as a matter of law.”
The Department of Education does not have exclusive jurisdiction over companies that service federal student loans (loan servicers). The CFPB, Federal Trade Commission (FTC), Department of Justice (DOJ), AGs, and other law enforcement agencies have jurisdiction over loan servicers.
The Congress did not exempt the $1.3 trillion federal student loan market from the jurisdiction of CFPB or other agencies. The Congress directed the CFPB to establish MoUs with the Department to coordinate assistance related to federal student loans or private education.
