The Department of Education is intervening on behalf of student loan servicers, some accused of illegally operating borrowers, by refusing to pass on information to law enforcement agencies in many states investigating businesses, some consumer advocates say.
The department's unwillingness to share data from or about student loan servants is disclosed in documents and correspondence with the Senate Education Subcommittee recently received by NBC News.
"This is a brazen act of lawlessness," says Christopher Peterson, a law professor at the University of Utah and a former law enforcement lawyer at the Consumer Protection Bureau, the government's Consumer Protection Service.
"I think they interpret what their authority to suspend enforcement is," he added.
Diane Auer Jones, top education adviser Secretary Betsy DeVos wrote to two Democratic members of Congress on June 24 that "we no longer make such requests for the senseless disclosure of records by individuals seeking to exercise regulatory or law enforcement power." , "a policy that the agency claims stems from its interpretation of federal law.
The Department of Education published a March 201
"After nearly a year of hiding the truth, the Secretary of the Education Department" finally admitted to interfering with law enforcement to protect predatory student loan debt collectors and employees instead of ensuring that student loan borrowers are treated "That's completely backwards and it tells you everything you need to know about Secretary DeVos' priorities."
Jones replied to a Feb. 19 letter from Murray and Rep. Rosa DeLauro, D- Conn., Which are on the budget subcommittees and credits. He funded the education department, in which they told DeVos that her agency had "historically and appropriately" provided access to student loan records.
"However, the department's recent steps suggest Your law enforcement agency's previous commitment may no longer be your policy or practice, "MPs said.
More than 20 attorneys general in the Democratic state, including California, North Carolina and Pennsylvania, also raised this concern in a joint letter to DeVos in April, saying the department's "recent rejection of applications" was a "drastic departure from its long-standing practice." "And that this information is essential in their law enforcement roles in large-scale fraud cases, especially in the profit-relief and debt relief sectors.
Also in April, the head of the Consumer Protection Bureau, which began during the Obama administration, collected tens of thousands of complaints from both private and federal education loan companies, he suggested. in a letter to Senator Elizabeth Warren, Massachusetts, who helped set up the Consumer Bureau nearly a decade ago – that the agency was stifled because "student loan officers refused to provide information."
The Education Department maintains that under The Confidentiality Act 1974 he has the discretion to publish data on borrowers shared by his contractors, and that a third party seeking access to these records must go through the department.
In questions about Jones' letter, the Department of Education denied on Monday that it was a general policy not to share data with state law enforcement. If information is requested as part of efforts to regulate student loan service and the department believes the regulation has been suspended by federal law, then the data will not be published, a spokesman said.
He added that
In his letter, Jones says, the department determined whether to release records, seeking "to balance the borrower's interest in privacy with the need for the record. In addition, before opening a record, the Ministry must ensure that the legal requirements for disclosure are met. "
Jones also emphasized in his letter that federal law could prevent state regulations. In recent months, several states, including California, Illinois, Maryland and New York, have adopted rules that try to force servicing loans to comply with state laws Consumer Protection or Licensing.
Liz Hill, spokesman for the Department of Education, said in a previous statement that "a statewide approach to regulating federal assets causes confusion for borrowers and makes administering here's the loan program more complicated and expensive. "
The Student Loan Alliance, a trade group, defended the department's interpretation of" not only good law, but good policy. "
But student loan protectors and higher education analysts who spoke with NBC News say the department's leadership has no legal standing.
"There is no explicit prevention of state law with respect to the oversight of employees of the Higher Education Act or other federal law," said Whitney Ba Kli-Denny, senior adviser on policy at the Center for Responsible Lending, North Carolina-based nonprofit that studies the debt of student loans and predatory lending. She added that in the case of lending, "countries have long been recognized as having the power of police corporations and industry on behalf of consumers."
The rally between the federal government and the states comes as part of a broader change during the Trump administration to move away from squeezing student loan servants and profit colleagues accused of harassing students. The student debt crisis in the country only grew after 45 million student borrowers saw their collective debt bubble up to about $ 1.5 trillion.
Navient Corp., one of the largest student loan servicing companies with 12 million clients, has filed at least six lawsuits – from the Consumer Financial Protection Bureau and Attorneys General in California, Illinois, Mississippi, PA and WASHINGTON – Blame the loan giant for managing struggling borrowers on plans to pay for higher costs or excessive default, allowing students to temporarily defer payment while interest is still being charged. Navient says the allegations in the lawsuits "are false and we vigorously challenge them in court" and that he "helped millions of borrowers" get involved in income-driven repayment plans.
With litigation pending in courts involving student loan officers, there has been a dispute as to whether federal law replaces state and local laws, as proposed by the Department of Education. However, judges reviewing cases in Pennsylvania and Illinois have lent credence to states' right to hold student loan officers accountable when it comes to consumer protection.
"So far, the courts have given virtually no legal weight to the DeVos Memorandum," Barkley-Denney. "
Meanwhile, the Department of Education has received at least 40 law enforcement requests this fiscal year, Jones said, and Most of the requests were related to local agencies investigating individual borrowers rather than wider studies, some involving the use of subpoenas.
But according to a June letter, pending requests were still pending. information from the Bureau on Consumer Consumer Relations, which first contacted the education department in January and the North Carolina Attorney General's Office, which initially denied its request last October related to the public service loan forgiveness program
Pennsylvania Attorney General Josh Shapiro, who is among the most aggressive law enforcement officials in the department, though the service made it a point to ask for aggregated data, not borrowers. Annie resorting to predatory student loans, he said it wanted data also refrain from compromising the privacy of borrowers. attracted by student loan companies, why records should remain under wraps. The data included internal documents, policies and procedures and loan files throughout the country.
"We don't want sensitive information to be disclosed, and without the data we want, we can't completely handle the current issues with the system as it stands now," said Shapiro spokesman Jacqueline Rhodes.
Seth Frotman , executive director of the Consumer Credit Center, Consumer Protection Group, said Jones' response to lawmakers this summer underscores how "the department is engaged in calculated, unprecedented efforts to thwart law enforcement officers working to protect ditopoluchatelite. "
Frotman created the nonprofit center after abruptly resigning last summer, as a student loan officer at the Consumer Protection Bureau in protest of what he believes harmful policies are being promoted under the current White House According to Frotman, the Consumer Bureau filed a lawsuit against Navient in 2017, a case that remains bureaucratic.
Frotman's post was vacant until last month, when Robert Cameron, previously a senior higher education officer in Pennsylvania. Ah The decision aroused criticism: Cameron's former employer is one of the federal government's servicing loans, and his FedLoan department works exclusively with borrowers in the federal public service program for which the federal agency for surveillance reported last week there is a staggering 99 percent rejection rate for public servants seeking forgiveness for a student loan from May 2018 to May 2019.
Spokesperson Ms. Angela Morabito said in a statement about the updated loan forgiveness program that "some of the MPs who declare [its] a high rate of denial are the ones who created a program that is difficult to rank," and the department is working to create online tools to help borrowers get approved.
In response to questions about Cameron and whether the Consumer Financial Bureau is concerned about the information-blocking education department, a Consumer Bureau spokesman said agency director Katie K raninger had informed Congress earlier this year, that he is in the process of finding a new Ombudsman.
"With this position now filled, the Bureau expects productive relations with the Ministry of Education," the spokesman said.  Peterson, a former attorney at the Consumer Bureau, said that while it is not clear why the department appears to have curtailed the efforts of law enforcement agencies seeking to ensure that student loan companies are the best service to borrowers, the main reason for student credit is lost
"We need to help people learn – that's the mission," he said. "It's not to help quasi-banks make money."