, said the head of the Federal Bureau of Student Assistance. new leadership
Friday, which he claimed, would “make it easier” for state attorneys general and regulators to obtain information from the FSA and companies that the Department of Education hires to administer the federal student loan program.
The new guidance represents the opposite of the government’s approach to regulating student loan companies after the Department of Education, led by then Secretary Betsy DeVos, said the federal government should oversee the system because loans are federal assets, and fought to limit state involvement in oversight.
In 2017, the FSA issued a memo instructing loan service companies to send requests for information from state attorneys general or other third party to the FSA, which would normally turn them down. The states then filed lawsuits against the FSA and its lending companies for information. The Trump administration has also fought state oversight in court, prompting Democratic attorneys general accuse the administration
obstruct investigations and ultimately harm borrowers.
The FSA’s new approach will be to review requests for data from government and local agencies and financial regulators “quickly and approve them whenever possible,” Cordray said.
“Governments and regulators need information when they think a loan service company might be in breach of law or regulation. To be sure, they need to familiarize themselves with company policies and procedures, their directories, customer complaints, and other demonstrations of how the company works. Getting information from us helps government officials better enforce their laws that protect “borrowers of federal student loans,” Cordray wrote in Blog post.
“It’s time for us to be a partner, not an obstacle,” he added.
A top Republican on the House of Representatives Education and Labor Committee said Cordray’s new leadership “obeys the whims of Democratic state politicians who are more interested in taking companies out of business than helping needy borrowers with student loans.”
“Congress is giving the FSA a responsibility to implement the federal student loan program for a reason. Federal programs need federal leadership. However, the first thing for COO Cordray is to transfer his responsibilities to others, ”said Republican Party member Virginia Fox of North Carolina. statement.
The new federal student aid policy is one of several changes made by the Biden administration to Department of Education policy. In March, the department flipped over
a controversial Trump-era policy that would result in an estimated $ 1 billion in student debt cancellation for borrowers who were defrauded by their colleges.
However, the Biden administration is still facing pressure from some Democrats in Congress to write off $ 50,000 in federal student loan debt per borrower. Advocacy groups are also calling for a complete overhaul of the current borrower protection process.