‘Brazen Act of Lawlessness’: Betsy DeVos’ Education Dept. Accused of Obstructing Student Loan Probes

Under the leadership of Secretary Betsy DeVos, U.S. Department of Education has been blocking state law enforcement agencies from investigating student loan service companies – the entities charged with collecting student loan payments –  by refusing to provide states with information relating to allegations of illegal activity in multiple states. The department’s unwillingness to cooperate with state investigations was uncovered in a June 24 letter from DeVos’ senior advisor Diane Auer Jones to the Senate education subcommittee recently obtained by NBC News.

In response to the Committee’s inquiry regarding what information had been provided to State Attorneys General investigating student loan service companies, Jones declared that the department had stopped sharing that information with state law enforcement entities, reasoning that oversight of loan servicers fell solely under the purview of the Education Department.

“With regard to data from or about student loan servicers, we recently published a Notice of Interpretation in the Federal Register indicating that some attempts to regulate Federal student loan servicers and the servicers of guaranteed Federal student loans are preempted by Federal law,” Jones wrote. “As a result, we no longer grant such requests for nonconsensual disclosure of records from entities purporting to exercise regulatory or enforcement power that is preempted.”

In the letter, Jones contends that under the Privacy Act of 1974, the Education Department retains discretionary control over student borrower data shared by loan service companies. Despite the Committee noting that such data has “historically and appropriately” been made available to state law enforcement agencies, Jones made clear that the Department’s position had changed, only providing information on a case-by-case basis.

Under the Department’s new interpretation of the Privacy Act, loan service company records cannot be disclosed without the company’s consent unless the record is being used “for a purpose which is compatible with the purpose for which the record was collected,” and the Department no longer views state investigations as fitting within that definition. Jones explained that the Department removed the availability of such data because “we were concerned that the use of such records by law enforcement agencies to investigate or prosecute violations of the law…might not be compatible with the purposes of the [Federal Student Aid] Ombudsman in collecting the records.”

In comments to NBC News, Professor Christopher Peterson of the University of Utah Law School said the Department’s position represented “a brazen act of lawlessness.” The former Consumer Financial Protection Bureau attorney also characterized the department as “overinterpreting what their authority is to stop law enforcement.

Democratic Senator Patty Murray also told the news outlet that Jones’s letter represented clear evidence that the Education Department was obstructing investigations into whether student borrower’s rights were violated.

“After nearly a year of hiding the truth, Secretary DeVos’ Department of Education finally admitted that it is interfering with law enforcement in order to protect predatory student loan servicers and debt collectors instead of making sure student loan borrowers get treated fairly,” Murray said. “That’s completely backwards and it tells you all you need to know about Secretary DeVos’ priorities.”

Education Dept Enforcement Disclosure 06-24-19 by Law&Crime on Scribd

[Image via Chris Kleponis-Pool and Getty Images]

Jerry Lambe is a journalist at Law&Crime. He is a graduate of Georgetown University and New York Law School and previously worked in financial securities compliance and Civil Rights employment law.

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