Bloomberg reported the U.S. Department of Education could issue a directive that says federal law prohibits state governments from regulating student loan debt companies that collect student loan debt on behalf of the Education Department.
A document from the Department of Education that was obtained by NPR states:
“Congress created and expanded the Direct Loan Program with the goal of simplifying the delivery of student loans to borrowers, eliminating borrower confusion, avoiding unnecessary costs to taxpayers, and creating a more streamlined student loan program. Recently, several States have enacted regulatory regimes or applied existing State consumer protection statutes that undermine these goals.”
If the directive is enacted, the student loan debt collectors will benefit because they would face less regulations. Student loan borrowers are currently protected by state regulators who do not allow collectors to use aggressive tactics and unfair business practices to collect on debts.
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