The brief focused on the impact of improper student loan servicing practices on student borrowers, particularly seniors and borrowers of color, and argues that the Higher Education Act (HEA) does not broadly preempt state law regulation of federal student loan servicers based on misrepresentation claims. In the case, Commonwealth of Pennsylvania v. Navient Corporation et al., Shapiro alleges Navient violated Pennsylvania’s laws by steering borrowers towards costly repayment programs or into forbearance, which allows students to temporarily postpone repayment while interest continues to accrue.

“State protections and laws for student loan borrowers are critical to addressing the $44 billion student loan debt crisis in New Jersey,” said Phyllis Salowe-Kaye, Executive Director of New JerseyCitizen Action. “Student loan servicers must be held accountable for deceptive and abusive practices that trap student loan borrowers, including far too many senior and minority borrowers, into ruinous debt. For this reason New Jersey enacted its own landmark student loan borrower protection law earlier this year.

The landmark student loan borrower law New Jersey enacted earlier this year calls on the state Department of Banking and Insurance to establish strong lending standards and a licensing requirement for any student loan servicer operating in the state. The law also gives DOBI the power to enforce standards, fine violators, designate a student-loan ombudsman, and will protect students from abusive practices by loan servicers who manage and collect student debt.