New York Department of Financial Services (NYDFS) Superintendent, Linda A. Lacewell, recently wrote an Opinion Article in the New York Daily News, addressing the student lending industry. According to Lacewell, the Trump administration and Education Secretary Betsy DeVos have “dismantled critical consumer protections available to students” and “gutt[ed]” the Consumer Financial Protection Bureau’s student lending office. As a counter measure, NYDFS has launched a new “Step Up for Students” initiative to combat unfair and discriminatory practices relating to educational loans.
A main component of the Step Up for Students initiative is a proposed regulation that would mandate licensing requirements, impose servicing standards and prohibit certain practices. The initiative also includes in-person meetings with student loan borrowers throughout New York and an online portal to file complaints against student loan servicers. NYDFS will appoint a student advocate who will provide advice on managing student loan debt, respond to complaints against student loan servicers, mediate disputes and advocate for New York student loan borrowers.
Acting on this new initiative, NYDFS announced an investigation into the student debt-relief industry on September 5, 2019. NYDFS issued subpoenas to eight private student debt-relief companies to investigate whether the companies are deceiving consumers into paying steep charges disguised as monthly subscription fees for debt consolidation services which are offered by the U.S. Department of Education at no cost.
The Step Up for Students initiative is part of Lacewell’s broader effort to prioritize enforcement and consumer protection that includes reorganizing NYDFS and making key personnel appointments.