Lesser Defends Student Loan Bill Of Rights

April 9, 2018

In response to a lawsuit filed in federal court to block Connecticut from enforcing a law protecting student-loan borrowers from unscrupulous actions by the student-loan industry, Rep. Matthew Lesser, the principle author of the 2015 law, issued a statement Monday.

“This lawsuit represents the latest in what increasingly appears to be collusion between Education Secretary Betsy DeVos and the student loan industry,” Lesser, House chair of the legislature’s Banking Committee, said.

“States have a right and a duty to protect borrowers from predatory practices, but the industry and Secretary DeVos seem determined to do whatever is necessary to shield student loan companies from oversight. What are they trying to hide? Why has PHEAA ceased cooperating with Connecticut regulators?

“I am confident Connecticut and Attorney General George Jepsen will fight this lawsuit vigorously, and Commissioner Perez should pull their license to service private or federal loans if they fail to comply with the law. The chutzpah of these companies is unbelievable. There are 40 million Americans in the process of paying back student loans, and Connecticut borrowers need effective regulation to protect their rights.

“If PHEAA is successful in its suit, it will leave the $1.4 trillion student loan industry without any effective regulator,” Lesser said.

In 2015, Connecticut unanimously passed Public Act, 15-162 the nation’s first Student Loan Bill of Rights, designed to protect student loan borrowers by providing state regulation of private student loan companies. On Thursday, a major student loan servicer, the Pennsylvania Higher Education Assistance Agency, or PHEAA, sued the Connecticut Department of Banking and the U.S. Department of Education in federal court seeking to block the state from enforcing the law.

Since taking office, the Trump Administration has taken a series of steps to shield the student loan servicing industry from state oversight, including intervening in January on the side of industry in a lawsuit brought by the Massachusetts Attorney General and issuing a “notice of interpretation” last month in the federal register that Connecticut’s law and other laws like it were federally preempted.