A group of 31 state attorneys general, from both sides of the aisle, have written a letter to Congress urging them not to exempt student lenders, servicers, and debt collectors from state-level oversight and enforcement.
A copy of the letter can be accessed here.
Noting that debt collectors, among other groups of financial services organizations, are required to follow state law as well as federal law, “there is no justification to upset this balance now.”
The Department of Education has plans to pre-empt state laws related to student loan servicing and collections. The student loan industry has been lobbying for months for federal pre-emption.
State licensing requirements, for example, help identify problems before they reach the federal level, the AGs contended in their letter.
There is no need for Congress to undermine state authority or annul complementary state disclosure requirements just as our combined federal-state efforts against abusive practices in the student loan servicing industry is bearing fruit. Nor is there any justification to seek to interfere with the traditional police power of states to protect their own residents from abuses in the marketplace.
Among the attorneys general signing the letter were those from New York, California, Illinois, Pennsylvania, Tennessee, Oklahoma, and Virginia.
