Welcome to Student Loan News, a weekly summary of developments and events affecting college debt in the U.S. Join us each Friday for a look at goings-on that could impact your own student loan situation.
Supreme Court could get last word on student loan rules
With complaints against student loan servicers mounting, more and more states have stepped in to regulate.
As we’ve reported in the past, some state are enacting new rules for educational loan lenders. In other cases, the states have taken servicers and lenders to court — for example, multiple states’ attorneys general have joined a federal suit against Navient for allegedly steering borrowers away from programs that could have helped them (a charge that Navient denies).
But, as MarketWatch reported this week, the student loan companies are pushing back, claiming that they are governed by federal law rather than state law, making states’ complaints invalid. Several cases testing this legal theory are currently winding their way through the court system, and the report quotes Washburn University law professor David Rubenstein as saying the issue looks likely to end up at the Supreme Court for review “in the foreseeable future.”
While the ultimate outcome is anyone’s guess, the report also cites Dan Zibel, the vice president and chief counsel for the National Student Legal Defense Network (NSLDN), a borrower advocacy group, as saying he’s “cautiously optimistic” judicial review of the question will come down on the side of the plaintiffs.
How it affects YOU: If you feel you were misled by your lender or servicer, or you otherwise have an interest in one of the suits against them, then you’ll definitely want to follow this story. While resolution of these cases may still be many months (but hopefully not years) away, you can reach out to your elected representative’s office of constituent services for information. And if you have a special situation in which you feel you were wronged by your servicer or lender, you could also speak with a student loan attorney, and in some cases, can provide legal aid for free.
Also in the news …
- While we noted last week that some Democratic Party candidates running for president are looking at the idea of helping provide tuition-free college, Politico quoted former New York City mayor Michael Bloomberg — who is also considering joining the presidential race — as opposing the plan, calling it “totally impractical.”
- Not only is Navient facing government lawsuits, but it could now be in trouble with its shareholders. A judge ruled that a shareholder suit could proceed against the Delaware-based corporation over allegations it “pumped up its stock price by hiding serious problems with its loan portfolio and other risks from investors,” according to Delaware Business Court Insider.
- The Albany Times Union has a report out on how the student debt crisis is falling disproportionately on the shoulders of women, and how the ranks of student loan borrowers over age 60 is on the rise.
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