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.