Legal Newsline

Wednesday, September 18, 2019

New York, Colorado lead opposition to legislation restricting oversight of student loan fraud

By Marian Johns | Mar 21, 2018

NEW YORK — New York Attorney General Eric Schneiderman has joined Colorado Attorney General Cynthia Coffman in leading a group of 30 attorneys generals to oppose legislation  aimed at obstructing states from preventing and fighting student loan servicing fraud. 

In a letter sent to Congress, the attorneys general urged lawmakers to stop any legislation including the pending Higher Education Act (PROSPER Act), which they say would "dismantle state oversight" of the student loan industry and calling any such legislation "an all-out assault on states' rights and basic principles of federalism."

“Gutting state-level protections for students would be disastrous – putting the financial interests of the loan industry ahead of the welfare of student borrowers in New York and across the country,” Schneiderman said in a statement.  “States have a fundamental right to protect our residents from financial fraud and abuse."

The proposed bill, according to the attorneys general would protect the student loan industry from state-level enforcement and reforms which are currently under way in several states. 

"At a time when millions of Americans are struggling with student debt, we need more cops on the beat – not fewer," Schneiderman stated in a news release. "Our bipartisan coalition of attorneys general is sending a clear message [that] the federal government should be working hand in hand with states to combat student loan fraud and abuses, not trying to sideline its state partners."  

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Colorado Attorney General New York Attorney General