Rep. Courtney and Attorney General Tong Welcome New Biden Administration Policy on Student Loans
NORWICH, CT—Today, Congressman Joe Courtney (CT-02) and Connecticut Attorney General William Tong welcomed the announcement of new policy from the U.S. Department of Education (ED) and Secretary Miguel Cardona that will restore protections for American student loan borrowers of all ages. Secretary Cardona and the Biden Administration’s new policy on student loans will restore state governments’ ability to conduct oversight of loan servicers on behalf of borrowers within their jurisdictions—a crucial element of maintaining good stewardship over federal student aid programs, and ensuring that loan servicers are compliant with Department standards.
“There’s no question that Secretary Cardona and the Biden Administration made the right call here,” said Congressman Courtney. “Former Secretary DeVos and the previous Administration had done basically everything they could to allow for-profit loan servicers to confuse people, mislead people, and at the end of the day to deny people the opportunity to get federal education benefits they’d earned, like PSLF. They took a group of for-profit student loan servicers we already knew weren’t compliant, and gave them leeway to operate in the dark while defrauding students and pocketing taxpayer dollars. I’m proud that it’s a U.S. Secretary of Education from our state of Connecticut who is putting an end to it. Secretary Cardona’s new memorandum will finally restore the ability for Attorney General Tong—one of the most talented attorneys general in the U.S. and a dogged defender of student loan borrowers—and other offices to once again conduct proper oversight, and reign in lenders who aren’t playing by the rules.”
“Connecticut families owe billions of dollars in student loans, a crushing financial burden with serious implications for anyone looking to own a home, start a family, or grow a business,” said Attorney General Tong. “This crisis is compounded by predatory loan servicers who deceive borrowers about their options. The Department of Education for years failed to protect borrowers from these predatory servicers, and actively sabotaged state attorneys general in our efforts to hold bad actors accountable. This announcement from Secretary Cardona is a major breakthrough for justice and accountability. I look forward to a new era of partnership between the Department of Education and state attorneys general to protect student loan borrowers from abuse and deception.”
In December 2018, former Education Secretary Betsy DeVos and the Trump Administration issued a memorandum barring student loan servicers from releasing important information to state law enforcement officials, hindering their ability—and that of federal agencies like the Consumer Financial Protection Bureau (CFPB)—to maintain proper oversight of loan servicers who might be engaged in unscrupulous practices. Shortly after Secretary DeVos issued that memorandum, the federal Office of the Inspector General (OIG) found that 61% of loan servicers were non-compliant with Department standards.
Courtney is a senior Member of the House Education and Labor Committee, and in April 2019 he questioned then-Secretary DeVos on her department’s effort to undermine protections for student loan borrowers. In his remarks, Courtney noted the track record of success that state law enforcement has had in shutting down deceptive loan practices:
“Brazenly, the Department did not even publicly notice this memo, and it was only obtained because someone at the Department leaked it,” Courtney said during the hearing. “So, I want to ask, […] what is the rationale for the Department to shut off that flow of information regarding student loan servicers, which has been standard operating procedure for decades? This is a decision you made—to shut off this information to people who are law enforcement. They’re investigating things like fraud. So please explain the decision in that memo.” Click here to read more.
In July 2019, Rep. Courtney and Attorney General Tong were joined by representatives from the American Federation of Teachers (AFT) and from the Connecticut Department of Banking to highlight the ongoing mismanagement of ED’s Public Service Loan Forgiveness (PSLF) program under Secretary DeVos. At the time, the American Federation of Teachers had filed a lawsuit against the U.S. Department of Education for their failure to properly administer the program, citing reports that only a paltry 1% of PSLF-eligible applicants had been granted the loan forgiveness they ought to have qualified for.
“Before the Trump and DeVos Administration, the [Connecticut Department of Banking] would routinely work with the U.S. Department of Education in a lot of information sharing,” said Matthew Smith, Connecticut Department of Banking, at the 2019 event. “That has since stopped. It is the result of the Trump Administration cooperating with these student loan servicers, and being more attentive to their requests than they are to the consumers.” Click here to read more.