House & Senate Address Oversight of Student Loan Servicing Companies

By The New England Council

DC Shuttle …

House Holds Hearing on Student Loan Servicing –

On Wednesday, the House Appropriations Committee’s Labor-HHS-Education Subcommittee held a hearing on how The Education Department has to do a better job of holding accountable the companies that service students loans, lawmakers said. They heard from a panel including an official from the Education Department’s internal watchdog, which last month issued a report that found department officials over the past several years had frequently uncovered problems with loan servicers but rarely penalized them. Roll Call reports.

Hearing on Student Loan Ombudsman Leads to Senator’s Bill –

On Thursday, the House Financial Services Committee held a hearing and took testimony from the Consumer Financial Protection Bureau’s former student loan ombudsman Seth Frotman. MR. Frotman told lawmakers on Thursday about what he sees as an “abdication of responsibility” on behalf of the Trump administration. Frotman resigned last year in protest of the administration’s policies. On Friday, Senators Tom Udall (D-NM), Sherrod Brown (D-OH) and Elizabeth Warren (D-MA) introduced new bill (S. 720) that would re-establish agreements between the Education Department and CFPB terminated by the Trump administration and would require the CFPB director to “provide adequate staffing levels” for the ombudsman “to carry out the functions and duties of that office.” The bill is also sponsored by Senators Richard Blumenthal (D-CT), Chris Van Hollen (D-MD), Brian Schatz (D-HI), Kamala Harris (D-CA), Amy Klobuchar (D-MN), Bob Menendez (D-NJ) and Tammy Duckworth (D-IL).

Senators Introduce Military Education Bill –

On Thursday, Senators Ben Sasse (R-NE), Tom Cotton (R-AR) and Tim Scott (R-SC) introduced a bill intended to make it easier for military families to pay for private schooling, tutoring and online learning programs. They reintroduced a bill (S. 695) that would allow military families to apply for an education savings account worth $6,000 annually.

Judge Rules Against ED in Special Education Case –

On Thursday, a federal judge ruled that the Education Department violated the law when it delayed by two years the implementation of an Obama-era rule designed to tackle racial disparities in special education. U.S. District Judge Tanya Chutkan ruled that the Education Department failed to provide a “reasoned explanation” for its decision last year to delay the rollout of the Obama-era “significant disproportionality” rule. Chutkan also said the department failed to consider the costs of the delay, “rendering the Delay Regulation arbitrary and capricious.” In both cases, the judge said the department violated the Administrative Procedure Act, which governs federal agencies’ regulatory actions. The ruling in the U.S. District Court for D.C. means the 2016 regulations immediately go into effect.

Concern for College Financial Health –

Governor Charlie Baker filed legislation on Wednesday to strengthen the state’s ability to monitor the financial health of private colleges in the state, a move that comes as an increasing number of small New England schools are struggling financially, and several have closed. The New York Times wrote a piece on the closing of liberal arts colleges.


For more information on the Council’s work on higher education issues, please contact Taylor Pichette.


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