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Financial Services Law Insights and Observations

Cordray streamlines process for student loan information requests

Federal Issues Student Lending Department of Education Student Loan Servicer

Federal Issues

On May 28, Richard Cordray, Chief Operating Officer of Federal Student Aid (FSA) at the Department of Education, issued a memorandum to FSA vendors revising guidance related to handling outside requests for Department records and data. In 2017, the Department instructed loan servicers working for FSA to avoid responding directly to inquiries from third parties, including state and federal regulators, and required state attorneys general and regulators to submit requests for information directly to the Department. However, according to a blog post announcing the revised guidance, Cordray noted that FSA usually rejected the requests, thus forcing states to file lawsuits against FSA and student loan servicers in order to obtain the information. Cordray further emphasized that states and regulators need access to company policies and procedures, handbooks, consumer complaints, and other information should they think a student loan servicing company might be violating a law or regulation. The revised guidance supersedes the Department’s 2017 guidance and creates a “streamlined and expedited process” for reviewing information requests made by any state or federal authority for information pertaining to companies engaged in student loan lending or collections. Instructions are provided for vendors that receive information requests seeking to obtain Department records or data.

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