FEDERAL PREEMPTION REGULATIONS IN THE STUDENT LOAN PROGRAM

In response to regulations enacted by states to reign in aggressive loan servicing and stem potentially unfair or deceptive practices, the Department of Education published an interesting Federal Register Notice clarifying that the Federal Loan Servicing Rules contained in the Higher Education Act preempt state laws. In some cases, the Department explains state regulations conflict directly with the Department’s interests because states have sought to proscribe conduct Federal Law prohibits such as additional reporting, disclosure and collections practices.

ED SEVERS TIES WITH CONSUMER FRAUD PROTECTION BUREAU

Last month ED sent a letter to the head of the Consumer Fraud Protection Bureau Richard Cordray terminating the Memorandum of Understanding (MOU) between the two agencies. The MOU was put in place during the Obama administration and was intended to make it easier for the two agencies to share information and collaborate on matters related to student aid.  In the rather scathing letter, FSA’s Chief Operating Officer Dr. A. Wayne Johnson said that the CFPB was undermining and violating the intent of the MOU.  Mr. Johnson asserted that the CFPB’s intervention in FSA matters created confusion for borrowers and in some cases conflicting information. You can read the full letter to the CFPB here.

UPDATE ON BORROWER DEFENSE

On June 15th the Department of Education published a series of Federal Register Notices and announcements related to several key regulations passed under the Obama Administration.

The notices announced the postponement of certain provisions of the Borrower Defense Regulations (BDR) following a lawsuit by the California Association of Postsecondary Schools which challenged a number of the Borrower Defense regulations. The administration determined that in light of the pending litigation, it was necessary to postpone the regulations until the matter is decided in court. And CAPPS V. DeVos has some teeth.

The Federal Register Notice on Borrower Defense also announced the Department’s intent to establish two new Negotiated Rulemaking Committees and a timeline for public comments and public hearings for, BDR and also Gainful Employment (GE).

Read our recent update on Gainful Employment here.

Read our recent update on the Regulatory Reform Task Force and Call for Public Comments here.

 

REGULATORY REFORM TASK FORCE UPDATE

Department of Education Regulatory Reform Task Force

Back in February the President signed Executive Order 13777 to “reduce regulatory burden”. As required, ED has created a Regulatory Reform Task Force (RRTF) to review regulatory and sub-regulatory guidance throughout the department. The RRTF has been working on identifying regulations that should be changed or eliminated and has published a request for public comments in the Federal Register.

Word on the Hill is that the RRTF has identified more than 150 regulations that may be appropriate for repeal, replacement or modification.

So far however, few public comments have been submitted.

I know one rule that I’d like to see repealed – The selective Service Registration Requirements that require men to register as a condition of receiving Federal Student Aid. Have a rule in mind? The public comment period is open until August 21, 2017. I submitted my comments and you can find more information about submitting your comments here.