Friday, June 14College Admissions News

Stronger Partnerships with State Allies to Protect Student Borrowers

Stronger Partnerships with State Allies to Protect Student Borrowers

As the chief operating officer at Federal Student Aid (FSA), I am committed to ensuring that borrowers receive high-quality service that helps them access the benefits granted by law. The work we do at FSA is crucial for protecting the more than 43 million Americans who have federal student loans.

FSA and the U.S. Department of Education can’t do it alone. In my experience as Ohio attorney general and later as the director of the Consumer Financial Protection Bureau, I saw the importance of state regulation and oversight to identify problems and deliver relief when companies take advantage of people. I have also seen how essential it is in our system of federalism that officials from different parts of our government can collaborate effectively.

That’s why I’m excited to announce today that we’re taking an important first step to build a better partnership with our state allies. We’re announcing a new change that will make it easier for state attorneys general and regulators to get the information they need from FSA and the companies who work for us to service and manage federal student loans. It’s time for us to be a partner, not a roadblock.

Here’s how we’re doing it. In 2017, FSA published a memo, which some people call the “Bradfield Memo.” It told the loan servicing companies that work for FSA that if a state attorney general came to them for information, they must send the request to us before releasing anything. When those requests came in, FSA usually rejected them, forcing states to file lawsuits against FSA and our loan servicers to get the information they need. This memo, coupled with repeated denials, blocked states from getting the simple information they needed to protect their residents by ensuring that they were getting the best advice from our loan servicers.

Instead of finding reasons to deny these requests, we should be spending our time partnering with state agencies to effectively oversee our loan servicers and debt collectors. Effective today, we’re getting rid of the Bradfield Memo and replacing it with a new memo setting out a different approach. Now, when we receive these requests, our staff will be ready to work with our state partners to review them quickly and approve them whenever it is possible to do so.

That may sound rather complicated. But here’s what it means for you, federal student loan borrowers. States and regulators need information when they think a loan servicing company might be violating a law or regulation. To know for sure, they need to look at the companies’ policies and procedures, their handbooks, complaints made by customers, and anything else that shows how the company operates. Getting information from us helps state officials better enforce their laws that protect you.

We want the companies we hire to help you by providing high-quality customer service. We want to ensure they give you the best advice and help you make responsible decisions about your student loans.

This is only a start. As we move ahead, FSA has more work to do to establish strong relationships with state officials. We believe federal and state officials should be partners rather than adversaries. By working together more productively, we can build a stronger system of federal student aid to help people all over this country gain easier access to the American dream.

Richard Cordray

Published at Fri, 28 May 2021 17:02:02 +0000

Article source: