Attorney General Jim Hood joined a bipartisan group today of 30 attorneys general in sending a letter to Congress, urging them to reject legislation that would block states from preventing and combatting fraud and abuse by the student loan industry.
The pending version of the Higher Education Act reauthorization (H.R. 4508, also known as the PROSPER Act) includes language to preempt state level oversight of private companies that originate, service, or collect on student loans. As drafted, the language attempts to immunize the student loan industry from the state-level enforcement and reforms underway across the country.
Describing the language as “an all-out assault on states’ rights and basic principles of federalism,” the letter urges Congress to strip the language from House bill and to omit it from consideration in the Senate.
As of the fourth quarter of 2017, U.S. borrowers owed an estimated $1.38 trillion in federal and private student loans—more than for auto loans, credit cards, or any other non-mortgage loan category.
“Mississippians alone have a total outstanding student loan debt balance of $12.69 billion,” said General Hood. “States are currently able to investigate and prosecute fraudulent student loan practices that are so egregious, students are provided with complete loan forgiveness. If Congress does not reject this legislation, states will no longer be able to provide these types of protections to consumers, and their vote will be another example of billion dollar companies buying legislation.”
In recent years, state attorneys general have investigated significant, far-reaching abuses in the student loan industry and won settlements returning tens of millions of dollars to student borrowers.
Major state-led investigations of student loan abuses in which Mississippi has recently been involved include:
· Education Management Corporation: The investigation uncovered that the school’s recruitment practices misled students about program costs, graduation rates, and job placement rates. As part of the multi-state settlement, state attorneys general obtained over $100 million in loan forgiveness, including more than $1.2 million for Mississippians.
· Corinthian Colleges: State attorneys general were critical in uncovering widespread misconduct at the now-defunct Corinthian Colleges, which made misrepresentations about post-graduate employment rates. The attorneys general worked to obtain relief for repayment of the students’ loans for tens of thousands of defrauded students nationwide. Nearly 6,000 Mississippians who attended and used loans at the for-profit schools were eligible for federal student loan cancellation.
The letter was led by New York Attorney General Eric Schneiderman and Colorado Attorney General Cynthia Coffman, and signed by the attorneys general of New York, Colorado, California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Montana, Nebraska, New Mexico, New Jersey, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Utah, Vermont, Virginia, Washington, and the District of Columbia, as well as the Executive Director of the Hawaii Office of Consumer Protection.
Attorney General Jim Hood Press Release