In a public comment to the Virginia State Corporation Commission, the SBPC and 12 organizations representing consumers, students, student loan borrowers, and teachers draw attention to industry attempts to circumvent the legislative process, and call on the regulator to faithfully implement the Commonwealth’s new consumer protections.
Earlier this year, after several years of advocacy, the Commonwealth passed the Student Loan Borrower Bill of Rights, which gives the Bureau of Financial Institutions the authority to license student loan servicers and creates a whole suite of substantive rights to protect borrowers from harmful servicing practices. This was in response to significant evidence and complaints about the borrower harms caused by the servicing industry.
Unfortunately the same industry lobbyists that tried to prevent the legislation with the General Assembly and Governor are now holding up the implementation of the law’s regulations. They submitted comments to the SCC claiming that state oversight is preempted by federal law, prompting the SCC to initiate a separate round of comments specifically on this question, even though it was raised and dismissed during the legislative process and the SCC should be implementing the law as passed. There are no preemption issues with the Commonwealth’s new law.
This coalition comment letter builds on the US Department of Education’s recent legal opinion addressing this exact issue–whether states can supervise/license servicers of federal student loans–and asserts that states are not categorically preempted under the federal Higher Education Act. As the letter explains, overseeing the industry of student loan servicers is within states’ historical power and within the spirit of the Department of Education’s opinion. The coalition calls on the SCC to faithfully implement these borrower protections as they were passed into law.
Read the Letter: Response to the State Corporation Commission’s Order Requesting Additional Comments on Proposed Regulations to Implement Virginia’s New Student Loan Borrower Bill of Rights