By Rebecca Maurer | November 18, 2020
In 2018, the SBPC and the University California, Irvine School of Law founded the Student Loan Law Initiative (SLLI) as a place where the leading thinkers on student loan issues could convene and collaborate to produce cutting-edge research to help people better understand and address the needs of the tens of millions of people struggling with student loan debt. Since its launch as the nation’s first academic center focused solely on student debt and the law, SLLI has worked to foster high-quality research and develop a legal foundation to end the student debt crisis.
This month, SLLI is proud to join the UC Irvine Law Review in announcing the publication of the journal’s latest edition dedicated exclusively to exploring the intersection of student debt, consumer protection, and the law. This publication has been a year in the making—in February, legal scholars, government officials, and advocates from around the country gathered at the UC Irvine campus for an academic symposium dedicated to student loan law. Authors presented research findings that exposed pervasive racial disparities in the market, demonstrated a clear need for stronger state regulations, and explored new frontiers in student debt.
With a new administration poised to take action on student debt, and continued efforts by states to protect borrowers, the articles appearing in this issue of the UC Irvine Law Review will inform advocacy efforts and provide the legal foundation to bring justice for harmed borrowers. This collection of articles can be a critical tool as policymakers seek to tackle systemic issues that have plagued the student loan marketplace. Below are summaries of the articles in this special student loan edition of the UC Irvine Law Review.
The Forgotten Stewards of Higher Education Quality
By: Matthew Adam Bruckner, Associate Professor, Howard University School of Law
This article looks at the role that states play in guaranteeing the quality of higher education institutions and ensuring borrowers are not targeted by low-value institutions. Professor Bruckner argues that the current “triad of regulators”—state authorizers, federally recognized accreditors, and the U.S. Department of Education—charged with policing predatory institutions of higher education have largely failed, and that there are a number of concrete actions states can take to clamp down on predatory practices and guarantee the quality of the institutions that operate in their state.
Forgotten Borrowers: Protecting Private Student Loan Borrowers Through State Law
By: Prentiss Cox, Professor, University of Minnesota Law School; Judith Fox, Professor, Notre Dame Law School; Stacey Tutt, Visiting Professor of Law, UC Irvine School of Law
This article examines the consequences of the lack of protections and rights for private student loan borrowers who have attended for-profit schools. With many of the most predatory practices in the student loan market taking place in the for-profit school sector, and the fact that the vast majority of private student loans are co-signed, typically by older family members, consumer harm has been broad. To address these problems, the article’s authors propose two types of state legislation. For borrowers attending for-profit schools with private loans, the authors suggest protections similar to those afforded to federal student loan borrowers. For all private student loans, the authors suggest a requirement that lenders engage in a mandatory settlement process similar to the process used in mortgage mediation during the foreclosure crisis.
Relief for Student Loan Borrowers Victimized by “Relief” Companies Masquerading as Legitimate Help
By: Creola Johnson, Professor, Ohio State Moritz College of Law
This article looks at the shortcomings in the federal response to “relief” companies that target over 44 million student loan borrowers with deceptive promises of enrolling them in income-driven repayment plans and loan forgiveness programs. In recent years, these companies—which often pretend to be affiliated with the Department of Education—have been able to flourish in an environment lacking federal regulatory oversight. While existing federal repayment programs are already free to borrowers, these companies weaponize modern technology to convince borrowers to pay unlawful fees in exchange for false promises to help them reduce or forgive their loans debts. To counteract this issue, Professor Johnson highlights the importance of states establishing ombudsmen to advocate for borrowers and eliminate their exposure to relief companies, while also having Congress require the Department of Education to implement technology-based solutions to prevent relief companies from taking over borrowers’ online loan accounts to conceal their fraudulent activities.
Illusory Due Process: The Broken Student Loan Hearing System
By: Deanne Loonin, Attorney, National Consumer Law Center
This article argues that the primary avenue for relief for borrowers in default, student loan collection hearings, is broken beyond repair. Presenting a wide range of evidence, the author, shows how these hearings provide no more than an illusion of due process. To fix this, the article offers proposals that would improve the hearing system, including eliminating private contractor outsourcing, and increasing government accountability. Along with fixes to the hearing system itself, the author argues that systemic changes to the current debt-fueled federal student aid system are needed as well.
State Regulation of Federal Contractors: Three Puzzles of Procurement Preemption
By: David Rubenstein, Professor, Washburn University School of Law
Over the years, private companies servicing over $1 trillion in federal student loan debt have allegedly engaged in widespread consumer abuse but have rarely faced any consequences from the Department of Education. To fill in this accountability gap, a number of states have recently passed “Student Borrower Bills of Rights,” to try and take action where the federal government has not. The result has been state versus federal battles over whether federal law blocks states from performing these functions. This article examines three federalism questions at the heart of these debates that could have far-reaching implications for the future of student loan law and federal contracting: first, whether the federal government’s constitutional immunity from state law extends to shield federal contractors; second, whether federal procurement laws preempt state licensing of federal contractors; and third, whether federal contracts that expressly incorporate state law can save state law from preemption.
The Contract State, Program Failure, and Congressional Intent: The Case of the Public Service Loan Forgiveness Program
By: Alan White, Professor, CUNY School of Law
With the continued focus on the possibility of sweeping student loan forgiveness, Professor White explores what the history of the Public Service Loan Forgiveness (PSLF) program can tell us about the ability to enact student loan forgiveness on an even broader scale. Highlighting the failures that have plagued the PSLF program as an example of the dysfunction of the contract state, the article looks at how the goals motivating student loan forgiveness and the make-up of the system that administers loan repayment and cancellation programs clash, and who is ultimately accountable for these failures.
Rebecca Maurer works at the Student Borrower Protection Center and is Counsel and Program Manager for the Student Loan Law Initiative.
About the Student Loan Law Initiative
The Student Loan Law Initiative is a partnership between the Student Borrower Protection Center and the University of California, Irvine School of Law to build a body of rigorous academic work around how to address the student loan crisis. SLLI fosters the highest quality academic research, provides grants for research, and builds the capacity of student loan experts to shape changes to this market. SLLI experts have testified before the U.S. Congress as well as the California State Assembly on student debt issues. In October 2019, SLLI convened student loan practitioners, advocate and leading legal experts for the first colloquium on student loan law, which laid the foundation for a February 2020 SLLI symposium, hosted in partnership with the UC Irvine Law Review. Scholarship presented at that symposium was published on November 6, 2020 in a dedicated volume of the UC Irvine Law Review.