Legal Seminar, Denver, CO

Student Loan Servicing: Obstacle Preemption

• The Notice asserts that State regulation of Federal student loan servicing is precluded because such regulation purportedly impedes the congressional

objectives in creating the Federal student loan programs. – Uniformity in the administration of the federal student loan programs – Protect and save federal taxpayer money

• Several courts have been unable to confirm that uniformity was an important goal of Congress and no court has held that uniformity also requires exclusivity even in the absence of conflict.

• It is preemption of state servicing laws, not their application, that will cost taxpayers money.

For Discussion Purposes Only

Student Loan Servicing: Conflict Preemption

• The Notice provides several examples of requirements under State servicing laws that purportedly directly conflict with federal requirements. – state impose deadlines on servicers for responding to borrower inquiries or disputes – state laws requiring specific procedures to resolve borrower disputes. • But the Notice fails to establish the existence of an actual conflict between state and federal law – Fails to show that compliance with federal and state requirements is a physical impossibility. – Fails to identify with specificity the federal requirement at issue.

For Discussion Purposes Only