Having stood up and promoted the whistleblower program at the CFPB, it appears that Richard Cordray may now be taking similar steps at Federal Student Aid (“FSA”). On November 10, the Department of Education (“ED”) and FSA issued a bulletin inviting whistleblowers to provide information about potential violations of the Higher Education Act (“HEA”) and its implementing regulations. … Continue Reading
Higher Education Act
U.S. Department of Education Axes Arbitration Provisions in Final Student Loan Rules
The U.S. Department of Education recently announced final regulations, effective July 1, 2023, designed to expand and improve the major student loan discharge programs authorized by the Higher Education Act. Among other things, the final regulations prohibit institutions that participate in the Federal Direct Loan program from requiring borrowers to sign mandatory pre-dispute arbitration agreements or class-action waivers that would be applicable to disputes about Direct Loans. … Continue Reading
Department of Education Anti-Arbitration Regulation Fails Supreme Court Tests
The U.S. Department of Education recently announced proposed regulations designed to expand and improve the major student loan discharge programs authorized by the Higher Education Act. Among other things, the proposed regulations would prohibit institutions that participate in the Federal Direct Loan program from requiring borrowers to sign mandatory pre-dispute arbitration agreements or class-action waivers. … Continue Reading
Student loan servicers seek to clarify federal preemption of state student loan servicing regulations in suit to enjoin Washington, D.C. law
The Student Loan Servicing Alliance, a trade group representing student loan servicers, has sued the District of Columbia to enjoin the operation of Law 21-214, the Student Loan Ombudsman Establishment and Servicing Regulation Amendment Act of 2016. The Act, which became effective February 18, 2017, established a student loan ombudsman within the D.C.… Continue Reading
Department of Justice: Massachusetts’s Claims Against PHEAA Preempted By Federal Law
On Monday, January 8, 2018, the United States Department of Justice weighed in with a Statement of Interest under 28 U.S.C. § 517 in a pending state-court action (No. 1784CV02682) brought by the Commonwealth of Massachusetts against the Pennsylvania Higher Education Assistance Agency (PHEAA). The Commonwealth alleges that PHEAA violated state and federal consumer protection laws by engaging in unfair and deceptive student loan servicing practices on loans owned or subsidized by the federal government, including with respect to popular programs such as income-driven repayment plans and so-called TEACH grants. … Continue Reading
Senator Hagan Introduces the Servicemember Higher Education Protection Act
New legislation, titled the Servicemember Higher Education Protection Act (the “Bill”), was introduced recently by Senator Kay Hagan (D-NC). The Bill includes several provisions that expand protections under the Servicemembers Civil Relief Act (SCRA) with respect to student loans.
- The Bill would amend the SCRA to expand the available interest rate limitation for student loans, aligning the protection with that currently applied only to mortgage obligations.