More states pass student loan servicer laws Presented by Comcast

With help from Nicole Gaudiano and Benjamin Wermund

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— A growing number of states are passing laws to regulate companies that collect federal student loans, in direct opposition to the Trump administration.

— Education groups — and a 2020 candidate — are pushing back on the White House’s proposal to direct money away from the Pell Grant surplus to pay for a new NASA mission to the moon.

— Officials from the Veterans Affairs and Education departments will testify today before a House panel that’s examining the impact of sudden college closures on student veterans.

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MORE STATES PASS LAWS TARGETING STUDENT LOAN COMPANIES: Three more states are defying the Trump administration in passing laws to create new rules for companies that collect federal student loans.

— Colorado Gov. Jared Polis (D) and Maryland Gov. Larry Hogan (R) each signed legislation this week to regulate student loan companies operating in their respective states. They join New York Gov. Andrew Cuomo (D), who won passage of a new student loan servicing law as part of his budget earlier this year.

— The trio significantly expands the number of states that have passed laws meant to crack down on abuses by student loan servicing companies. California, Connecticut and Illinois were among the states that previously passed such laws, which typically require student loan servicers to be licensed and regulated by state officials.

— In New York, the new law puts student loan servicers under the jurisdiction of the state’s financial services regulator, widely considered as one of the nation’s most aggressive. Linda A. Lacewell, the acting superintendent of the Department of Financial Services, said in a statement that the law creates “sweeping new protections for millions of student loan borrowers, cracks down on unscrupulous lending practices, and helps ease the financial burden that New Yorkers take on to further their education."

— The laws in Colorado, Maryland and New York will affect nearly 4 million student loan borrowers, according to Seth Frotman, the former CFPB student loan official who's been advocating for the state laws. Those borrowers “will know that when things inevitably go wrong, their state has their back,” Frotman said. “However, tens of millions of borrowers in other states still have nowhere to turn and need their state to take action.”

— There are active campaigns to get state legislators to pass student loan servicer laws in Maine, Massachusetts, Minnesota, Nevada, Oregon, Rhode Island and New Jersey.

— The state-by-state efforts to crack down on student loan servicers were buoyed in some cases by Democratic gains in state houses last November. They’ve been spearheaded by a coalition of liberal groups, consumer advocacy organizations, and labor unions.

— The Trump administration and student loan industry groups have opposed the growing state efforts. They’ve argued that states don’t have the power to regulate companies collecting federal student loans.

— The issue of federal preemption is also being hashed out in the courts. Most recently, a judge last year struck down key parts of the District of Columbia’s legislation meant to crack down on student loan servicers, ruling that it conflicted with federal law. Other related cases are winding their way through federal appeals courts.

HOUSE VETERANS COMMITTEE TACKLES SUDDEN COLLEGE CLOSURES: The House Veterans Affairs' subcommittee on economic opportunity is holding a hearing today to examine the effect of sudden college closures on student veterans. Lawmakers will focus on “how VA and the Department of Education track veterans who have been affected by these closures,” a committee spokesperson said.

— Two VA officials are set to testify: Margarita Devlin, principal deputy under secretary for benefits, and Charmain Bogue, the acting executive director for education service. Also on the witness list: Robin Minor, a deputy chief operating officer of Federal Student Aid; Melissa Emrey-Arras, who oversees education issues at the GAO; and Joseph Wescott of the National Association of State Approving Agencies.

— The committee will also hear from two veterans — one who attended Virginia College and one who attended Argosy University — whose education was interrupted when those institutions, both for-profit colleges, suddenly closed their doors.

— The hearing starts at 10 a.m. Eastern in room 210 of the House Visitor Center. Watch live here.

SENATE COMMITTEE TO MARK UP STEM BILL: The Senate Commerce Committee today will mark up bipartisan legislation, S. 737 (116), that would expand STEM education initiatives at the National Science Foundation for young children. The bill, sponsored by Sen. Jacky Rosen (D-Nev.), a former computer programmer, would also offer new research grants to help boost girls’ participation in STEM education.

— Rosen and Sen. Kevin Cramer (R-N.D.) will also introduce legislation today that would award grants to workforce intermediaries to help boost cybersecurity apprenticeship programs. A companion bill will be introduced in the House with bipartisan support.

COLLEGE GROUPS SLAM TRUMP PROPOSAL TO MORE DEEPLY CUT PELL SURPLUS: Groups representing colleges and universities and student aid advocates on Tuesday pushed back on the White House’s proposal this week to make a deeper cut from the Pell Grant surplus.

— The American Council on Education, the umbrella organization for higher education groups, said on Twitter the proposal “would hurt students and make college more expensive.”

— Peter McPherson, president of the Association of Public and Land-grant Universities, wrote in a letter to lawmakers that it was a “false choice” to have to decide “between providing additional funding for NASA and ensuring the long-term financial security of the Pell Grant.” The Institute for College Access and Success called on Congress “to continue rejecting these efforts to needlessly pit valuable federal investments against each other.”

— Sen. Kamala Harris, a California Democrat and 2020 presidential candidate, also slammed the move on Twitter. “We already have students forgoing meals & sleeping in cars because they can't afford the rising costs of college,” she wrote. “This is backwards.”

— A revised budget request for fiscal 2020, which was released by the White House on Monday, calls for eliminating nearly $3.9 billion from the Pell surplus — greater than the $2 billion cancellation Trump initially proposed in March. The proposal was made as part of White House’s pitch to Congress for $1.6 billion in new funding for a NASA mission to the moon.

— Flashback: This isn’t a new idea. The Trump administration has repeatedly proposed dipping into Pell reserve funding over the last few years. It sought to nix $1.3 billion from left-over Pell funding in 2017. And its fiscal 2018 and 2019 budgets similarly proposed multibillion-dollar cancellations, though the White House ended up later withdrawing both proposals. The administration also proposed in 2017 using $3.9 billion in Pell surplus funding to offset the cost of disaster relief.

— Republicans appropriators have also proposed tapping the Pell grant reserve fund in recent years, but Congress has mostly balked at making deep cuts. Congress cut $1.3 billion in fiscal 2017 as it restored year-round Pell Grants; and last year’s bipartisan funding deal included a $600 million cut to the Pell surplus.

— A new Center for American Progress report finds governors have proposed investments of nearly $3 billion in new state funding for child care, preschool and home visiting programs.

— The Institute for Higher Education Policy is out with two briefs diving into higher education data and privacy. One explains existing policy and how current laws and practices would pertain to any new federal postsecondary student-level data network. The other examines the challenges that Louisiana encountered when lawmakers enacted two sweeping student privacy measures that had unintended consequences on data sharing throughout the state.

— A new Manhattan Institute report looks at variations in school quality in 68 American cities, finding in most of them, parents can expect relatively consistent educations for their children across the district.

— Nevada bill aims to divert pot tax money to education fund: The Associated Press.

— Pennsylvania moves to expand National Guard college aid: The Associated Press.

— Former USC coach behind fake athletic profiles in college admissions scam, pleads guilty: NPR.

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