Local & State
|Feds block NC lawmakers from protecting student loan consumers|
|Education Dept. removes level of safeguards|
|Published Thursday, March 22, 2018 12:00 pm|
|The U.S. Department of Education has removed protections for students who've been duped by unscrupulous loan service providers.|
RALEIGH – If you're one of the thousands of North Carolinians with student loans, you now have one less level of protection if your loan-service providers turn out to be unscrupulous.
The U.S. Department of Education, led by Secretary Betsy DeVos, has issued an interpretation of the law that state student-loan servicing laws are preempted by federal law.
At the same time, the Department of Education has stopped sharing information on student loans with the Consumer Financial Protection Bureau, and the bureau has said it will no longer enforce laws.
According to Charlene Crowell, deputy communications director at the Center for Responsible Lending, it adds up to a bad situation for consumers.
“North Carolina is one of the most troubled states in the nation when it comes to student-loan complaints. It's a horrible situation to be in,” Crowell said. “The Consumer Financial Protection Bureau was created to be the consumer's financial cop on the block.”
Nationwide, there are 44 million Americans with a student-loan debt of $1.5 trillion. In the last five years, more than 50,000 complaints had been filed with the CFPB. North Carolina is one of 11 states with complaint numbers that grew more than 100 percent between 2016 and 2017.
North Carolina Attorney General Josh Stein has said one of his top priorities is cracking down on fraudulent student-loan relief groups, but Crowell pointed out his hands are now tied.
“For consumers, here’s the deal: If the Education Department is not going to work with CFPB to resolve student-loan complaints, and CFPB is not interested in aggressive consumer enforcement, why try to tie the hands of states who are only trying to protect their own residents?” she asked.
Crowell added that among those hardest hit by the change in interpretation of the law are people of color, because wealth disparities often lead them to seek high numbers of student loans.
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