Student loan agency will quit national trade group

Lawmakers say MEFA shouldn't belong to group pushing to weaken consumer protections

A MASSACHUSETTS STATE AGENCY in charge of making student loans found itself under fire on Wednesday for belonging to a national association that supports a move by the Trump administration to preempt state laws that protect student borrowers from unscrupulous practices by lenders and loan servicing firms.

The agency played down the suggestion that it contributed in any significant way to the effort by the national group, but announced that it was nonetheless ending its membership in the organization.

A group of more than 40 state legislators released a letter Wednesday sent to the Massachusetts Educational Financing Authority, a quasi-public state agency, raising questions about some $88,000 in membership dues it has paid from 2010 to 2017 to the National Council of Higher Education Resources, a national higher education finance trade organization. The lawmakers say the national group has been lobbying federal education officials to rule that federal law trumps any state consumer protection laws targeting student loans.

Earlier this month, Education Secretary Betsy DeVos filed a notice of a change in the office’s interpretation of federal law. The notice declares that federal law prohibits states from regulating firms that collect student debts for the federal education department.

According to a report issued earlier this month by the American Federation of Teachers, the National Council of Higher Education Resources has been lobbying the US Department of Education to take that move. The report says 24 state-backed student loan companies belong to the national group and contributed dues that helped support the lobbying efforts. Through public records request, the AFT obtained information on dues payments from 17 of the 24 states, including Massachusetts.

From 2010 to 2017, MEFA paid 88,646 in dues to the national organization, according to the teachers union report. All told, the 17 state agencies made payments of $2.09 million over that period.

“The bottom line is you have a quasi-public arm of state government participating in lobbying to undo state government actions,” said Sen. Eric Lesser, who took the lead in organizing the letter to MEFA, which was signed by 49 members of the Legislature.

On Wednesday afternoon, MEFA released a statement saying it would leave the national trade group.

“MEFA appreciates the concern expressed by the legislators, and upon review of the letter, will end its membership in the National Council of Higher Education Resources,” said the statement.

The statement seemed to take issue, however, with the suggestion that MEFA funding had any meaningful role in the group’s effort to influence federal rules. The statement said MEFA paid the national group $12,800 in membership dues. With about 7 percent of the organization’s budget devoted to lobbying, MEFA said about $896 of its dues last year would have supported those efforts.

Attorney General Maura Healey has spoken out against efforts to prevent state officials from overseeing student loan servicers. She was part of a bipartisan group of 30 state attorneys general that sent a letter earlier this month to Congress urging it to reject pending legislation that would put into law the rule interpretation DeVos has advanced. She has also filed actions a Pennsylvania loan servicer that has borrowers in Massachusetts.

“While Massachusetts students and families continue to struggle with shoddy loan servicing, we are disappointed that any trade association claiming to represent student interests would lobby to shut down state oversight,” Healey said in a statement.

Lesser said between the move by DeVos and efforts to curtail the power of the Consumer Protection Financial Bureau, the Trump administration is walking away from oversight of student loans. He said loan servicing companies are pursuing “exactly the same game plan” that banks employed in the run-up to the housing market collapse and recession in 2008.

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Michael Jonas

Executive Editor, CommonWealth

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

Lesser was informed by an aide of MEFA’s decision to leave the group while he was speaking with CommonWealth. “It’s tremendous news if that’s case, and that’s the right thing to do,” he said. “I’m gratified that they’ve recognized that it’s not good to be aligned with a group that is not acting in the interest of Massachusetts.”