Like a
bevy of other jurisdictions, the District of Columbia has
established a "borrower's bill of rights" which
creates minimum standards for timely processing, correction of
errors, and communication for servicers of federal student
loans.
In response to this state-level action, the U.S. Department of
Education recently
argued that all such regulations are wholly preempted by its
own regulatory efforts and the Higher Education Act of 1965
("HEA").
On March 20, the Student Loan Servicing Alliance
("SLSA"), a trade group representing companies who
collect education debt payments, invoked federal preemption in a
lawsuit seeking invalidation of D.C.'s borrower's bill of
rights. In particular, the complaint by SLSA argues that the bill
violates a provision of the HEA that says loans authorized by the
federal government are not subject to any disclosure requirements
under state law.
