SACRAMENTO -- Assemblymember Mark Stone (D-Monterey Bay) has issued a statement in response to the federal Department of Education’s Notice of Interpretation that states cannot pass or enforce regulations protecting student borrowers from predatory student loan servicing practices:
“The Department of Education has decided to abandon its responsibility to ensure that student loan borrowers receive fair treatment and basic information from their loan servicers when states choose to enact protections. As illustrated by the mortgage crisis that contributed to the Great Recession, states are among the first to see and experience the negative effects of a debt crisis. The increasing amount of student loan debt combined with unreliable and predatory loan servicing hampers state economic growth and prevents borrowers from achieving financial independence.
“What is similarly awful is the Department’s interpretation that state regulations should be abandoned in favor of weak federal standards. In this instance, the federal government – led by people who claim to respect and honor states’ rights – may be encroaching on California’s right to choose to protect its citizens. The federal government has left millions of student loan borrowers at the mercy of an industry that has acted unethically over and over again.
“In 2016, I wrote the Student Loan Servicing Act to protect California borrowers from student loan servicers’ predatory behavior and to ensure that borrowers receive reliable information regarding student loans and repayment options. In the years since then, the federal Department of Education has repeatedly stepped away from its responsibility to regulate servicers.
“Since the federal government clearly disfavors additional protection of American student borrowers, it is California’s right and responsibility to use state tools to protect its own citizens.”