The nation’s consumer watchdog agency is accusing the Education Department of impeding a lawsuit that could potentially bring financial relief to millions of student loan borrowers.
The Consumer Financial Protection Bureau is suing Navient Solutions, alleging the nation’s largest student loan servicer violated consumer protection laws and in some cases caused students to pay back too much on their student loans. But in court filings, the CFPB says the Education Department is refusing to authorize Navient to turn over documents. Without that authorization the federal government, as well as several state attorneys general suing Navient, could find it difficult to show what type of damage the company’s alleged misbehavior caused to borrowers.
Under the Obama Administration, the Education Department and the CFPB agreed to share records and resources in cases of potential violations of student borrowing or consumer protection laws. But after Trump-appointee Betsy DeVos took over, the Education Department rescinded that agreement, calling the CFPB “overreaching and unaccountable” and saying the bureau had no authority to oversee federal student loan servicers.
It appears the Education Department is sticking to that position, even though the CFPB is now also run by a Trump-appointee, Mick Mulvaney. He replaced Democrat Richard Cordray in November.
Caught in the middle of the dispute: a potentially large number of student loan borrowers.