The Conference of State Bank Supervisors (CSBS) is encouraging the U.S. Department of Education to rescind policies impeding state regulation of federal student loan servicers and debt collectors.
The CSBS recently joined the North American Collection Agency Regulatory Association (NACARA) in forwarding correspondence to the Education Department regarding the matter. During the Trump administration, they noted that the agency executed policies preventing state financial regulators from supervising federal student loan servicers and providing consumer protections available under state law.
“We appreciate that the Education Department has indicated that it recognizes state authority,” CSBS President and CEO John Ryan said. “However, more definitive action is necessary to better protect federal student loan borrowers, to allow effective supervision of student loan lenders, and to respect the authority of the state system.”
The CSBC and NACARA maintain they are seeking formal recognition that state regulation of federal student loans is independent from federal law as a means of allowing state financial regulators access to federal student loan servicer and debt collection records.
Per the correspondence, most federal student loan repayments paused during the Covid-19 pandemic are slated to continue in September, and state regulatory authority should be clarified to ensure borrowers are protected during the transition timeframe.
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