WASHINGTON, March 9, 2018 /FIR — The U.S. Department of Education took an important step today to reaffirm its longstanding position regarding the appropriate role of states in the federal student loan program. The Federal Higher Education Act and court decisions based on it are clear that federal preemption is appropriate where federal law is directing the management of federal programs. The 9th Circuit Court of Appeals clearly affirmed federal preemption in its 2009 Chae decision, which was based on the official intervention of the Department of Justice. In 2017, the U.S. District Court for the Southern District of Illinois affirmed the same matter in the Nelson case. Given the law, the legal precedent, and the fact that all of these loans are owned or backed by the federal government, federal preemption is appropriate.
The Department’s guidance is not just good law, it is good policy. Clear, uniform student loan servicing guidance from the federal government will help borrowers avoid the frustrations of an inconsistent patchwork of policies from individual states. It is critical that we set aside political student loan rhetoric and focus on creating effective solutions for the biggest issues facing borrowers, like simplifying complex repayment programs and improving college completion rates.
SLSA is the trade organization representing student loan servicers in the Federal Family Education Loan Program (FFELP), the Federal Direct Loan Program (FDLP), as well as servicers of private education loans. As loan servicers, we provide the full range of servicing operations, including conversion from in-school status to repayment, payment processing, customer service, collections, and claims processing for defaulted loans.
SOURCE Student Loan Servicing Alliance (SLSA)