The guidance establishes procedures to manage federal and state oversight of student loan servicers.
The U.S. Department of Education Federal Student Aid (FSA) office, under the leadership of Chief Operating Officer Richard Cordray, has issued updated vendor guidance establishing procedures for handling record and data requests received by FSA’s vendors.
The change is designed to “make it easier for state attorneys general and regulators to get the information they need from FSA and the companies who work for us to service and manage federal student loans,” Cordray wrote in a blog post.
“This guidance also establishes a streamlined and expedited process for reviewing requests from federal, state, local, tribal, and territorial Government agencies and financial regulators,” according to Cordray. “The department believes this change will enable FSA to collaborate and coordinate more effectively with our partners, including state attorneys general and federal and state financial regulators, as they engage in vital oversight of our vendors by facilitating access to the data they need.”
For federal student loan servicers contracted with the department, the guidance provides new processes for handling information requests from state regulators.
“In 2017, FSA published a memo, which some people call the ‘Bradfield Memo.’ It told the loan servicing companies that work for FSA that if a state attorney general came to them for information, they must send the request to us before releasing anything,” according to Cordray. “When those requests came in, FSA usually rejected them, forcing states to file lawsuits against FSA and our loan servicers to get the information they need. This memo, coupled with repeated denials, blocked states from getting the simple information they needed to protect their residents by ensuring that they were getting the best advice from our loan servicers. Instead of finding reasons to deny these requests, we should be spending our time partnering with state agencies to effectively oversee our loan servicers and debt collectors.”
In the blog post, Cordray also said FSA’s partnerships with agencies like the Consumer Financial Protection Bureau, where he served as director under the Obama administration to conduct joint oversight and supervisory examinations, will continue.
“To conduct these joint oversight and supervisory examinations effectively, our interagency partners need to have streamlined access to department records and data where such access is permitted by applicable laws and policies,” Cordray wrote.