Richard cordray, The head of the federal student aid office announced New guidance On Friday, he argued that it would “make it easier” for the state attorney general and regulators to get information from the FSA and the Department of Education to hire companies to manage the federal student loan program.
The new guidance is a reversal of the government’s approach to regulating student loan companies, with the Department of Education under then Secretary Betsy DeVos arguing that the federal government should monitor the system because loans are federal assets and reduce the involvement of states Have fought for inspection
In 2017, the FSA issued a memorandum to debt servicing companies to send information requests to the FSA from the State Attorney General or any other third party, which usually denied them. The states then filed suit against the FSA and its lending companies as a way of obtaining information. The Trump administration also fought a state watchdog battle in court, leading to the Democratic Attorney General Charge on administration To obstruct the investigation and ultimately harm the borrowers.
The FSA’s new approach, Cordray said, would be to review data requests from state and local agencies and financial regulators “quickly and approve them whenever possible.”
“States and regulators need information when they think a debt servicing company is violating a law or regulation. To know for sure, they need to know the policies and procedures of companies, their booklets, complaints made by customers. , And anything else that needs to be seen. Shows how the company works. Getting information from us helps state officials better enforce their laws that “protect federal student loan borrowers, Cordray wrote in a blog post.
“It is time for us to be a partner, not an obstacle,” he said.
Top Republicans on the House Education and Labor Committee argued that Cordray’s new guidance “leans to the craze of state-based Democrat politicians more interested in putting companies out of business than helping struggling student loan borrowers” Huh.”
“Congress charges the FSA with the duty to run federal student loan programs for a reason. Federal programs require federal leadership. Yet COO Cordray’s first order of business is to pass his responsibilities on to others,” Northern GOP Representative Virginia Fox of Carolina said. a statement.
The new federal student aid policy is one of several changes made by the Biden administration in the Department of Education Policy. Department in march Inverted A controversial Trump-era policy, which would lead to the cancellation of nearly $ 1 billion in student loans for borrowers cheated by their colleges.
However, the Biden administration still faces pressure by some congressional Democrats to forgive $ 50,000 in federal student loan debt per borrower. Advocacy groups are also calling for a complete overhaul of the current borrower defense process.