The U.S. Department of Education Restores Independent Oversight and Accountability Across the Student Loan System
August 9, 2021 | WASHINGTON, D.C. — Today, the U.S. Department of Education rolled back a Trump Administration directive issued by former Education Secretary Betsy DeVos that attempted to block state governments and individual student loan borrowers from seeking justice when student loan companies break the law. In its place, Education Secretary Miguel Cardona and Federal Student Aid Chief Operating Officer Richard Cordray are ushering in a new era of accountability for the student loan industry, offering state law enforcement officials, state financial regulators, and individuals an opening to halt abuses by the companies that manage $1.5 trillion in outstanding federal student loan debt. In response, SBPC Executive Director Seth Frotman released the following statement:
“When he was running for president, Joe Biden made a firm commitment to undo the damage to the student loan system caused by Betsy DeVos and Donald Trump. Today, Secretary Cardona and FSA Chief Rich Cordray are ending a years-long campaign by the student loan industry to obstruct justice — a scheme undertaken with the willing participation of the Trump Administration.
“Independent investigations performed by state Attorneys General and examinations by state financial regulators will ensure borrowers can finally invoke their rights under federal law to lower student loan payments and debt cancellation. By standing shoulder to shoulder with the state consumer protection community, President Biden has an opportunity to put an end to the lawlessness by many in the student loan industry and make clear it will not be tolerated.”
Last year, the SBPC issued a roadmap including specific steps for the new administration to reverse these Trump-era policies and restore access to justice for student loan borrowers. Today’s announcement marks a major step forward in this effort.
Millions of Americans with student debt, including teachers, military families, borrowers with disabilities, and older adults, continue to be cheated by student loan companies. These companies pad their profits while adding billions of dollars in additional and unnecessary student debt onto the backs of struggling borrowers.
Over the course of four years, Education Secretary Betsy DeVos shielded the student loan industry from the consequences of these widespread abuses. The Trump Administration repeatedly sided with some of the largest financial companies in America, rather than supporting efforts by law enforcement officials and regulators to protect borrowers and hold the industry to account.
In October 2020, the SBPC released a report outlining a series of immediate actions that could be taken by the Biden Administration to reverse the Trump Administration’s obstruction. Today’s action represents one of a number of steps the current Administration must take to strengthen oversight and accountability of the student loan industry.