Loan industry friends

EDUCATION Secretary Betsy DeVos made clear even before taking office last year that she was more interested in protecting the companies that are paid by the government to collect federal student loan payments than in helping borrowers who have been driven into financial ruin by those same companies.

Ms DeVos’ eagerness to shill for those corporate interests is apparent in a craven new policy statement from the Education Department. The document claims that the federal government can pre-empt state laws that rein in student loan servicing companies if such a law “undermines uniform administration of ” the student loan programme.

The servicers are working on the legislative front, too, pushing a particularly destructive House bill that would pre-empt the right of the states to oversee companies that originate, service or collect student loans – essentially neutralising reforms that are under way across the country.

The pre-emption statement shows the extent to which the Education Department has been captured by an industry it is meant to regulate. Fortunately, state regulators have made it clear they will continue to prosecute servicers violating state law – and will challenge the federal government in court if it tries to interfere.

Meanwhile, the dangerous pre-emption legislation pending in Congress deserves to die a swift death.