Federal Register / Vol. 86, No. 153 / Thursday, August 12, 2021 / Rules and Regulations 44277 

Ohio River between MM 756 to MM 757 

in Owensboro, KY. 

(b) Definitions. As used in this 

section, designated representative 

means a Coast Guard Patrol 

Commander, including a Coast Guard 

coxswain, petty officer, or other officer 

operating a Coast Guard vessel and a 

Federal, State, and local officer 

designated by or assisting the Captain of 

the Port Sector Ohio Valley (COTP) in 

the enforcement of the safety zone. 

(c) Regulations. (1) Under the general 

safety zone regulations in subpart C of 

this part, you may not enter the safety 

zone described in paragraph (a) of this 

section unless authorized by the COTP 

or the COTP’s designated representative. 

(2) To seek permission to enter, 

contact the COTP or the COTP’s 

representative by VHF–FM radio 

channel 16 or phone at 1–800–253– 

7465. Those in the safety zone must 

comply with all lawful orders or 

directions given to them by the COTP or 

the COTP’s designated representative. 

(d) Enforcement periods. This section 

will be enforced from 6 p.m. through 9 

p.m. on August 21, 2021. 

Dated: August 5, 2021. 

A.M. Beach, 

Captain, U.S. Coast Guard, Captain of the 

Port Sector Ohio Valley. 

[FR Doc. 2021–17049 Filed 8–11–21; 8:45 am] 

BILLING CODE 9110–04–P 

DEPARTMENT OF EDUCATION 

34 CFR Chapter VI 

[Docket ID ED–2021–OS–0107] 

Federal Preemption and Joint FederalState Regulation and Oversight of the 

Department of Education’s Federal 

Student Loan Programs and Federal 

Student Loan Servicers 

AGENCY: Office of the Secretary, 

Department of Education. 

ACTION: Interpretation. 

SUMMARY: The U.S. Department of 

Education (Department) issues this 

interpretation to revise and clarify its 

position on the legality of State laws 

and regulations that govern various 

aspects of the servicing of Federal 

student loans, such as preventing unfair 

or deceptive practices, correcting 

misapplied payments, or addressing 

refusals to communicate with 

borrowers. The Department concludes 

that these State laws are preempted only 

in limited and discrete respects, as 

further discussed in this interpretation. 

In addition, this interpretation will help 

facilitate close coordination between the 

Department and its State partners to 

further enhance both servicer 

accountability and borrower 

protections. This interpretation revokes 

and supersedes the interpretation 

published on March 12, 2018, ‘‘Federal 

Preemption and State Regulation of the 

Department of Education’s Federal 

Student Loan Programs and Federal 

Student Loan Servicers’’ (2018 

interpretation). 

DATES: This interpretation is effective on 

August 12, 2021. We must receive your 

comments on or before September 13, 

2021. 

ADDRESSES: Submit your comments 

through the Federal eRulemaking Portal 

or via postal mail, commercial delivery, 

or hand delivery. We will not accept 

comments submitted by fax or by email 

or those submitted after the comment 

period. To ensure that we do not receive 

duplicate copies, please submit your 

comments only once. In addition, please 

include the Docket ID at the top of your 

comments. 

• Federal eRulemaking Portal: Go to 

www.regulations.gov to submit your 

comments electronically. Information 

on using Regulations.gov, including 

instructions for accessing agency 

documents, submitting comments, and 

viewing the docket, is available on the 

site under FAQ. 

• Postal Mail, Commercial Delivery, 

or Hand Delivery: If you mail or deliver 

your comments about the interpretation, 

address them to Beth Grebeldinger, U.S. 

Department of Education, Federal 

Student Aid, 830 First Street NE, Room 

113F4, Washington, DC 20202. 

Privacy Note: The Department’s 

policy is to make all comments received 

from members of the public available for 

public viewing in their entirety on the 

Federal eRulemaking Portal at 

www.regulations.gov. Therefore, 

commenters should be careful to 

include in their comments only 

information that they wish to make 

publicly available. 

FOR FURTHER INFORMATION CONTACT: Beth 

Grebeldinger, U.S. Department of 

Education, Federal Student Aid, 830 

First Street NE, Room 113F4, 

Washington, DC 20202. Telephone: 

202–377–4018. Email: 

Beth.Grabeldinger@ed.gov. 

If you use a telecommunications 

device for the deaf (TDD) or a text 

telephone (TTY), call the Federal Relay 

Service (FRS), toll free, at 1–800–877– 

8339. 

SUPPLEMENTARY INFORMATION: 

Invitation to comment: We are 

inviting comment on this interpretation 

because we value the public’s input and 

perspective on these critical issues. We 

will consider public comment received 

and determine whether it is appropriate 

to modify or supplement this document. 

Background: On March 12, 2018, the 

Department published in the Federal 

Register the 2018 interpretation (83 FR 

10619). The 2018 interpretation set forth 

the Department’s position at the time on 

the legality of several State laws 

regulating Federal student loan 

servicers, which the Department found 

to be broadly preempted by Federal law. 

In particular, the 2018 interpretation 

opined that State regulation of the 

servicing of loans under the William D. 

Ford Federal Direct Loan Program 

(Direct Loans) ‘‘impedes uniquely 

Federal interests.’’ Id. at 10,620. The 

2018 interpretation also opined that 

State regulation of the servicing of loans 

under the Federal Family Education 

Loan Program (FFEL Loans) ‘‘is 

preempted to the extent that it 

undermines uniform administration of 

the program.’’ Id. 

Federal courts have had the 

opportunity to consider the 

Department’s position on preemption in 

several recent decisions. Those courts 

consistently declined to give any 

deference to the 2018 interpretation, 

finding it deserving of ‘‘little weight.’’ 

Nelson v. Great Lakes Educ. Loan 

Services, Inc., 928 F.3d 639, 651 n.2 (7th 

Cir. 2019); see also Lawson-Ross v. 

Great Lakes Higher Educ. Corp., 955 

F.3d 908, 921 n.13 (11th Cir. 2020) 

(same); New York v. Pennsylvania 

Higher Educ. Assistance Agency, 19 Civ. 

9155, 2020 WL 2097640 at *16 n.14 

(S.D.N.Y. May 1, 2020) (same); Student 

Loan Servicing Alliance v. DC, 351 F. 

Supp. 3d 26, 48–51 (D.D.C. 2018). Their 

analyses reveal the flaws in the 2018 

interpretation’s insubstantial 

justifications for its broad claims to 

preempt State laws on student loan 

servicing. 

The court in Student Loan Servicing 

Alliance analyzed the 2018 

interpretation in some detail, and its 

analysis has been largely followed by 

the other courts that have considered 

these preemption issues. The court 

found that the 2018 interpretation 

constitutes informal guidance, having 

not undergone any formal review 

process prescribed by statute. See 351 

F. Supp. 3d at 48–49. Thus, under 

Wyeth v. Lavine, 555 U.S. 555 (2009), 

the 2018 interpretation would be 

entitled only to Skidmore deference, 

which turns on its ‘‘thoroughness, 

consistency, and persuasiveness.’’ 

Wyeth, 555 U.S. at 577. The court went 

on to find that the views expressed in 

the 2018 interpretation warrant no 

deference because they are conclusory 


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and devoid of analysis, offering nothing 

more than ‘‘a retroactive, ex-post 

rationalization for DOED’s policy 

changes.’’ Student Loan Servicing 

Alliance, 351 F. Supp. 3d at 50. 

Moreover, those views produce a 

‘‘dramatic inconsistency’’ from explicit 

statements that the Department had 

made in prior judicial proceedings, and 

such a ‘‘stark, unexplained change’’ in 

the Department’s approach to 

preemption again precluded any 

deference. Id. Finally, the 2018 

interpretation was found to be neither 

thorough nor persuasive because it did 

not even specify the regulations that it 

claimed to be interpreting. See id. at 51. 

The Department has reconsidered the 

issues of preemption and the place of 

the States in regulating Federal student 

loan servicers and revokes the 2018 

interpretation as substantially overbroad 

and legally unsupported. Preemption 

issues are necessarily contextual and 

fact-specific, and the law does not 

support the sweeping claims made in 

the 2018 interpretation that Federal law 

broadly preempts State authority over 

Federal student loan servicing under 

principles of field preemption, express 

preemption, or conflict preemption. The 

Department views the States as 

important partners in ensuring the 

protection of student loan borrowers 

and the proper servicing of Federal 

student loans. The Department believes 

that the States have an important role to 

play in this area and it is appropriate to 

pursue an approach marked by a spirit 

of cooperative federalism that provides 

for concurrent action according to a 

concerted joint strategy intentionally 

established among Federal and State 

officials. Accordingly, as discussed 

further below, the Department believes 

that there is significant space for State 

laws and regulations relating to student 

loan servicing, to the extent that these 

laws and regulations are not preempted 

by the Higher Education Act of 1965, as 

amended (HEA), and other applicable 

Federal laws. We will analyze and 

determine preemption issues consistent 

with this overarching principle but 

based on the specific, individualized 

facts and circumstances of a given 

situation. 

A. General Preemption Principles 

As a preliminary matter, the 

Department recognizes that the Supreme 

Court has established the fundamental 

principles of Federal preemption 

doctrine over more than two centuries. 

Throughout the history of our country, 

the Court has repeatedly emphasized 

that claims of preemption of State law 

are narrowly construed and are to be 

resisted ‘‘ ‘unless that [is] the clear and 

manifest purpose of Congress.’ ’’ 

Cipollone v. Liggett Group, Inc., 505 

U.S. 504, 516 (1992) (quoting Rice v. 

Santa Fe Elevator Corp., 331 U.S. 218, 

230 (1947)). And where, as here, 

Congress legislates in a field 

traditionally occupied by the States, the 

presumption against preemption 

‘‘applies with particular force.’’ Altria 

Group, Inc. v. Good, 555 U.S. 70, 77 

(2008); see, e.g., Pacific Gas & Elec. Co. 

v. State Energy Resources Conservation 

& Dev’t Comm’n, 461 U.S. 190 (1983) 

(Federal licensing of safety designs for 

nuclear power plants did not preempt 

State action suspending construction of 

such plants on economic grounds); 

Huron Portland Cement Co. v. Detroit, 

362 U.S. 440 (1960) (city may enforce its 

local anti-pollution ordinance even 

against Federally licensed steamship). 

In 2015, Connecticut became the first 

State to enact a law requiring licensure 

and oversight of student loan servicers 

operating in the State. In its wake, a 

growing number of States have followed 

suit by enacting their own laws or 

adopting their own regulations. These 

laws or regulations provide for licensure 

and oversight of student loan servicers. 

They also typically confer or confirm 

protections for citizens against 

prohibited acts such as engaging in 

unfair, deceptive, or fraudulent acts or 

practices; misapplying payments; 

reporting inaccurate information to 

credit bureaus; or refusing to 

communicate with an authorized 

representative of the student loan 

borrower. 

The States that have created these 

regulatory regimes assert that they are 

acting under their general police powers 

for the purpose of protecting their 

citizens. That is a zone in which 

preemption is at its weakest, and the 

Supreme Court has emphasized the 

need to begin ‘‘with the assumption that 

the historic police powers of the States 

are not to be superseded by Federal Act 

unless that is the clear and manifest 

purpose of Congress.’’ Cipollone, 505 

U.S. at 516. Particularly ‘‘in a field 

which the States have traditionally 

occupied,’’ claims of preemption face a 

high hurdle that has been erected to 

preserve the traditional balance of 

powers under our system of federalism. 

Wyeth, 555 U.S. at 565. One such area 

is education, long regarded as a subject 

for the exercise of predominantly State 

powers. Another is consumer 

protection, which has traditionally been 

regulated by the States, with more 

limited and occasional Federal 

involvement. See, e.g., California v. 

ARC Am. Corp., 490 U.S. 93, 101 (1989); 

Florida Lime & Avocado Growers, Inc. v. 

Paul, 373 U.S. 132, 146 (1963). 

B. Field Preemption 

The 2018 interpretation opined that 

‘‘the statutory and regulatory provisions 

and contracts governing the Direct Loan 

Program preclude State regulation, 

either of borrowers or servicers.’’ 83 FR 

10621. It further stated that ‘‘the HEA 

and Department regulations governing 

the FFEL Program preempt State 

servicing laws that conflict with, or 

impede the uniform administration of, 

the program.’’ Id. 

This broad assertion of power—that 

Federal law preempts the entire field of 

law relating to Federal student loan 

servicing—has largely been rejected by 

the courts. That is particularly the case 

where Congress has considered the 

matter and expressly preempted specific 

but limited areas of State law, as 

discussed below. Indeed, ‘‘no circuit 

court that has considered the issue has 

found field preemption’’ to apply in the 

context of the HEA. Lawson-Ross, 955 

F.3d at 923; see also Nelson, 928 F.3d 

at 652 (‘‘Courts have consistently held 

that field preemption does not apply to 

the HEA, and we do as well.’’); Chae v. 

SLM Corp., 593 F.3d 936, 941–42 (9th 

Cir. 2010) (same); Cliff v. Payco Gen. 

Am. Credits, Inc., 363 F.3d 1113, 1125– 

26 (11th Cir. 2004) (same); Armstrong v. 

Accrediting Council for Continuing 

Educ. & Training, Inc., 168 F.3d 1362, 

1369 (D.C. Cir. 1999) (same). 

At no time prior to the issuance of the 

2018 interpretation did the Department 

take the view that field preemption 

applied to the servicing and collection 

of Federal student loans, and the courts 

have held that the Department did not 

provide persuasive reasons for its new 

position. After reexamining the issue, 

the Department rejects the analysis 

included in the 2018 interpretation and 

concludes that field preemption does 

not apply to the servicing and collection 

of Federal student loans. 

C. Express Preemption 

The 2018 interpretation further 

asserted broad preclusion of State 

student loan servicing laws on the 

ground that any State efforts to require 

Federal student loan servicers to reveal 

facts or information not required by 

Federal law are expressly preempted 

under the HEA. See 83 FR 10621. By 

painting with such a broad brush, the 

2018 interpretation failed to consider 

more carefully the specific terms of 

applicable Federal laws and how they 

apply to State regulatory efforts. 

In fact, the HEA does contain some 

specific provisions that explicitly 

preempt certain areas of State law, but 

those provisions are limited and 

selective. They include restrictions on 


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such matters as the application of State 

usury laws, see 20 U.S.C. 1078(d), of 

State statutes of limitation, see 20 U.S.C. 

1091a(a)(2), of the State-law defense of 

infancy, see 20 U.S.C. 1091a(b)(2), of 

State wage garnishment laws, see 20 

U.S.C. 1095a(a), of State laws on certain 

costs and charges, see 20 U.S.C. 

1091a(b), and of State disclosure 

requirements, see 20 U.S.C. 1098g. 

These provisions, granular as they are, 

reinforce the point that Congress 

consciously opted to displace State 

authority only in these limited 

particulars and did not intend or 

provide for broad field preemption of 

State laws governing student loan 

servicing. See, e.g., Nelson, 928 F.3d at 

650 (‘‘The number of those provisions 

and their specificity show that Congress 

considered preemption issues and made 

its decisions. Courts should enforce 

those provisions, but we should not add 

to them on the theory that more 

sweeping preemption seems like a better 

policy.’’) They also undermine any 

broad finding of express preemption, 

which requires courts to ‘‘identify the 

domain expressly preempted by that 

language.’’ Medtronic, Inc. v. Lohr, 518 

U.S. 470, 484 (1996). In the HEA, 

Congress identified a series of pinpoints 

rather than casting a wide blanket over 

the entire area, and its actions must be 

respected in determining the scope of 

preemption of State law. See id. at 485 

(intent of Congress is the ‘‘ultimate 

touchstone’’ of preemption analysis). 

The 2018 interpretation put special 

emphasis on the HEA provision 

addressing State ‘‘disclosure 

requirements.’’ See 83 FR 10621. It 

observed that this provision specified 

‘‘what information must be provided in 

the context of the Federal loan 

programs,’’ and expanded upon the 

provision by stating that it also nullified 

any State ‘‘prohibitions on 

misrepresentation or the omission of 

material information.’’ Id. But the courts 

have generally rejected this approach. 

First, this provision of the HEA covers 

information conveyed to the borrower 

before the disbursement of loan 

proceeds, before repayment of the loans 

begins, and during repayment of loans. 

The information disclosed is ‘‘intended 

to ensure that consumer-borrowers have 

accurate, relevant information and can 

make their own informed choices about 

their financial affairs.’’ Nelson, 928 F.3d 

at 647. Notably, the HEA provision on 

disclosure requirements does not cover 

affirmative misrepresentations, which 

are not about conveying either more or 

less information, but instead are simply 

about conveying accurate information 

so as not to mislead or defraud the 

borrower. The courts found this 

distinction to be deeply grounded in 

basic principles of the common law of 

torts, which sharply distinguish failureto-disclose claims from claims for 

affirmative misrepresentation. See, e.g., 

Lawson-Ross, 955 F.3d at 917–19; 

Nelson, 928 F.3d at 647–49. 

Second, the 2018 interpretation 

purported to rely on the Ninth Circuit’s 

decision in the Chae case, which 

concerned the failure to disclose 

information in the specific ways 

required in Federal law, such as in 

billing statements. But the findings in 

Chae do not preclude State regulation of 

affirmative misrepresentation about 

information that the servicer was not 

required to disclose. Nor can such 

conduct plausibly be reframed as a mere 

‘‘failure to disclose’’ correct 

information. Pennsylvania v. Navient 

Corp., 967 F.3d 273, 289–90 (3d Cir. 

2020). The Chae court drew this same 

distinction, holding that the ‘‘use of 

fraudulent and deceptive practices apart 

from the billing statements’’ are not 

preempted by Federal law. See Chae, 

593 F.3d at 943; see also Lawson-Ross, 

955 F.3d at 919 (discussing Chae); 

Nelson, 928 F.3d at 649–50 (same). 

For these reasons, the Department 

finds that, except in the limited and 

specific instances set forth in the HEA 

itself, State measures to engage in 

oversight of Federal student loan 

servicers are not expressly preempted 

by the HEA. Accordingly, in 

reconsidering the issue of express 

preemption the Department does not 

find the conclusions reached in the 

2018 interpretation to be persuasive. 

Likewise, the courts have not been 

persuaded when these issues have been 

presented to them. See, e.g., Student 

Loan Servicing Alliance, 351 F. Supp. 

3d at 51–55; Lawson-Ross, 955 F.3d at 

916–20; Nelson, 928 F.3d at 647–50. 

D. Conflict Preemption 

When, as here, both the Federal 

government and the States have 

legitimate interests in the same areas of 

governance, courts typically implement 

constitutional principles of federalism 

by seeking to balance and respect those 

mutual interests as much as possible. 

Where the two exercises of authority 

collide in irremediable conflict, then 

State law must yield to the superior 

force of the Supremacy Clause. But 

courts traditionally have understood 

their duty to harmonize Federal and 

State power to the greatest extent they 

can do so. Therefore, implied conflict 

preemption only nullifies State action if 

‘‘it is impossible for a private party to 

comply with both state and federal law’’ 

or if State law ‘‘ ‘stands as an obstacle 

to the accomplishment and execution of 

the full purposes and objectives of 

Congress.’ ’’ Crosby v. National Foreign 

Trade Council, 530 U.S. 363, 373 (2000) 

(quoting Hines v. Davidowitz, 312 U.S. 

52, 67 (1941)). 

Although the 2018 interpretation laid 

out some generalized grounds on which 

Federal and State regulations of student 

loan servicers could be found to clash, 

the courts have rejected these 

arguments. They have noted the 

Supreme Court’s overarching point that 

where the enacted legislation explicitly 

addressed the issue of preemption, as is 

true of the HEA, ‘‘there is no need to 

infer congressional intent to preempt 

State laws from the substantive 

provisions of the legislation.’’ Cipollone, 

505 U.S. at 517; see also Navient, 967 

F.3d at 292–93; Lawson-Ross, 955 F.3d 

at 920; Nelson, 928 F.3d at 648. 

When the court in Student Loan 

Servicing Alliance considered the 

District of Columbia’s procedures for 

protecting privacy, resolving 

complaints, and mandating compliance 

with timelines, it concluded that 

‘‘[u]pon closer inspection of the state 

and federal provisions, it is apparent 

that there is no actual conflict on the 

grounds of impossibility.’’ 351 F. Supp. 

3d at 60. The court determined that each 

objection raised by the plaintiff about 

the supposed inability to harmonize 

Federal and State procedures posited ‘‘a 

false conflict’’ and could be 

accommodated by officials who are 

willing to work together in taking 

reasonable steps to do so. Id. at 60–61. 

The most recent courts to consider 

these issues under the rubric of conflict 

preemption have consistently 

determined that the HEA places no 

emphasis on maintaining uniformity in 

Federal student loan servicing and thus 

they have upheld State authority to root 

out fraud and affirmative 

misrepresentations in the Federal 

student aid program. See, e.g., Navient, 

967 F.3d at 292–94; Lawson-Ross, 955 

F.3d at 920–23; Nelson, 928 F.3d at 650– 

51. 

Courts have found conflict 

preemption to apply to State laws 

requiring licensing of the Department’s 

student loan servicers in the limited 

circumstances where the licensing 

scheme purported to disqualify a 

Federal contractor from working within 

the State’s boundaries. It is wellestablished that States cannot impede 

the Federal Government’s selection of 

contractors through the imposition of a 

licensing requirement. In Leslie Miller 

Inc. v. Arkansas, 352 U.S. 187 (1956) 

(per curiam), the Supreme Court held 

that Federal bidding statutes and 

regulations requiring the selection of 


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‘‘responsible bidder[s]’’ for Federal 

contracts would be frustrated by 

‘‘giv[ing] the State’s licensing board a 

virtual power of review over the federal 

determination’’ about selecting its own 

contractors. Id. at 190. 

Two recent Federal court decisions 

have concluded that this wellestablished precedent applies to a 

State’s refusal to license Federal student 

loan servicers. In Student Loan 

Servicing Alliance, the Court concluded 

that the District of Columbia’s licensing 

scheme was preempted because it 

would bar Federal student loan 

contractors from working within the 

District. See 351 F. Supp. 3d at 61–72, 

75–76. Similarly, in Pennsylvania 

Higher Education Assistance Agency v. 

Perez, 457 F. Supp. 3d 112, 122–25 (D. 

Conn. 2020), the Court concluded that 

the State’s authority to grant or 

withhold a license to a Federal student 

loan servicer was preempted because it 

could disqualify Federal student loan 

contractors from operating within the 

State. 

E. Direct Loan Program and Preemption 

The Direct Loan program, which was 

created as part of the Student Loan 

Reform Act of 1993 (Pub. L. 103–66), 

poses some specific statutory and 

regulatory issues of preemption. In this 

program, the Federal government makes 

loans directly to the borrower and is 

responsible for all aspects of the loan 

from origination through repayment, 

including servicing and collection. 

Congress also provided that the 

Department could use contractors to 

service the loans and for any other 

purposes deemed ‘‘necessary to ensure 

the successful operation of the 

program.’’ 20 U.S.C. 1087f(b)(4). When 

procuring such services, the Department 

must comply with all applicable Federal 

laws and regulations and design its 

program so that the loan servicing is 

‘‘provided at competitive prices.’’ 20 

U.S.C. 1087f(a)(1). And the Department 

specifies in some detail ‘‘the 

responsibilities and obligations of the 

servicers for Direct Loans.’’ 2018 

interpretation, 83 FR 10620. 

The 2018 interpretation observed that 

in some instances, these provisions 

would operate to preempt State 

requirements that directly conflicted 

with requirements imposed under 

Federal law. For example, as discussed 

above, an attempt by a State to revoke 

a license granted by the Federal 

government for purposes established 

under Federal law would be invalid. 

Leslie Miller, 352 U.S. at 190. Yet this 

does not imply that a State cannot act 

to impose reasonable, generally 

applicable conditions on entities 

(including Federally licensed 

contractors) operating within the 

bounds of the State, as authorized under 

its police powers exercised on behalf of 

its citizens. See, e.g., California Coastal 

Comm’n v. Granite Rock Co., 480 U.S. 

572 (1987) (‘‘Rather than evidencing an 

intent to preempt such state regulation, 

the Forest Service regulations appear to 

assume compliance with state laws.’’). 

Where the States impose conduct 

requirements prohibiting affirmative 

misrepresentations by student loan 

servicers, those measures are not 

preempted by general disclosure 

requirements in Federal law. See, e.g., 

Cipollone, 505 U.S. at 529 (‘‘State-law 

prohibitions on false statements of 

material fact do not create ‘diverse, 

nonuniform, and confusing’ 

standards.’’). Notably, the courts have 

repudiated the expansive approach 

taken in the 2018 interpretation, which 

was premised on the claim that the 

purpose of the Direct Loan program was 

to ‘‘establish a uniform, streamlined, 

and simplified lending program 

managed at the Federal level.’’ 83 FR 

10621. See, e.g., Navient, 967 F.3d at 

293 (finding no legislative support for 

uniformity here); Lawson-Ross, 955 F.3d 

at 921–22 (same); Nelson, 928 F.3d at 

651 (same); College Loan Corp. v. SLM 

Corp., 396 F.3d 588, 597 (4th Cir. 2005) 

(same). Indeed, it is telling that 

Congress’s own stated purposes in the 

HEA itself make no mention of 

uniformity, see Lawson-Ross, 955 F.3d 

at 921, and the Supreme Court has held 

that courts are not to infer preemption 

merely from the comprehensive nature 

of Federal regulation. See New York 

State Dep’t of Social Servs. v. Dublino, 

413 U.S. 405, 415 (1973). 

The cases rejecting the claims made in 

the 2018 interpretation about the need 

for uniformity also point out that 

‘‘[e]ven if we assume that uniformity is 

a purpose of the HEA, [claims about 

affirmative misrepresentations by loan 

servicers] would not conflict with that 

purpose.’’ Lawson-Ross, 955 F.3d at 

922–23. Even such uniformity as does 

exist in the program ‘‘is not harmed by 

prohibiting unfair or deceptive conduct 

in the operation of the program that is 

not explicitly permitted by the HEA.’’ 

Pennsylvania v. Navient Corp., 354 F. 

Supp. 3d 529, 553 (M.D. Pa. 2018), aff’d, 

967 F.3d 273 (3d Cir. 2020). For similar 

reasons, the arguments in the 2018 

interpretation that accompany the 

arguments for uniformity, which relate 

to reducing costs and treating borrowers 

equitably while not confusing them, see 

83 FR 10620–21, are likewise 

unavailing. Reducing costs by making 

fraudulent or false statements to student 

loan borrowers is indefensible as a 

tactic; and allowing such misconduct to 

be perpetrated on a mass scale would 

neither foster equitable treatment for 

borrowers nor spare them any 

confusion. In addition, relieving Federal 

contractors of any exposure to liability 

for fraud or false statements would save 

them money, to be sure, but it would be 

a breathtakingly broad assertion of 

preemption, given that even Federal 

contractors are routinely subject to 

liability for violating State tort laws. 

F. FFEL Program Loans and Preemption 

As with the Direct Loan program, the 

FFEL program poses some specific 

statutory and regulatory issues of 

preemption. The general treatment of 

these issues runs parallel to the 

discussion for Direct Loans, in that 

some specific Federal laws and 

regulations preempt State laws that 

conflict squarely on matters such as 

timelines, dispute resolution 

procedures, and some particulars of 

debt collection and loan servicing. But 

here, too, the grounds for preemption of 

State laws are narrow and do not 

properly include any preemption of 

liability under State law for other 

matters, such as affirmative 

misrepresentations made to loan 

borrowers. 

In the past, the Department has 

identified specific types of State laws 

that are preempted because they would 

frustrate the operation and purposes of 

the Federal student loan programs. On 

October 1, 1990, for instance, the 

Department issued a notice interpreting 

its regulations governing the FFEL 

Program (then known as the Guaranteed 

Student Loan program), which require 

guaranty agencies and lenders to take 

certain actions to collect FFEL Program 

loans. The Department’s position in that 

interpretive notice was that the 

regulations requiring those activities 

preempt State laws regarding those very 

same activities. See 55 FR 40120. More 

specifically, the Department explained 

that its regulations establish minimum 

collection actions required on all FFEL 

obligations, which preempted contrary 

or inconsistent State laws that would 

prevent compliance with the Federal 

regulations. See id. at 40,121. These 

regulations for the FFEL Program are 

now codified at 34 CFR 682.410(b)(8) 

and (o). 

The 2018 interpretation describes 

some State laws as inconsistent with 

specific Federal measures. These 

include laws creating deadlines for 

servicers to respond to borrower 

inquiries or disputes; deadlines for 

notifying borrowers of loan transfers 

between servicers; requirements for 

dispute resolution procedures; and a 


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Federal Register / Vol. 86, No. 153 / Thursday, August 12, 2021 / Rules and Regulations 44281 

few other miscellaneous items. See 83 

FR 10621–22. If these specific State laws 

are directly inconsistent with an equally 

specific Federal law, they are 

preempted. 

As with Direct Loans, however, the 

limits of preemption are reached when 

the discussion moves beyond simply 

setting specific details of such 

‘‘administrative mechanisms.’’ Nelson, 

928 F.3d at 651. At the heart of State 

laws and regulations in this area are 

measures designed to protect 

consumers. There may be many such 

measures that are not preempted by the 

general disclosure requirements in 

Federal law, such as State measures that 

prohibit affirmative misrepresentations 

by loan servicers. See, e.g., LawsonRoss, 955 F.3d at 922–23. But this 

interpretation should not be read to 

suggest that only State laws and 

regulations relating to affirmative 

misrepresentation are not preempted. 

States may consider and adopt 

additional measures which protect 

borrowers and do not conflict with 

Federal law. These measures can be 

enforced by the States and the 

Department can and will work with 

State officials to root out all forms of 

fraud, falsehood, and improper conduct 

that may occur in the Federal student 

aid programs. 

G. Enhanced Borrower Protections 

Through Federal-State Cooperation 

The final section of the 2018 

interpretation cautions that broad 

preemption of State student loan 

servicer laws would not leave borrowers 

unprotected, and it elaborates ways that 

the Department ‘‘continues to oversee 

loan servicers to ensure that borrowers 

receive exemplary customer service and 

are protected from substandard 

practices.’’ 83 FR 10622. In this 

interpretation, the Department reaffirms 

these important objectives and its 

determination to hold servicers 

accountable for failing to meet these 

standards and expectations. Yet the 

Department also finds that broad 

preemption of State student loan 

servicer laws would disserve these 

objectives for two reasons. First, State 

officials serve as an essential 

complement to the Federal government 

in protecting their citizens from 

substandard or improper practices. 

Second, as explained below, the 

Department has concluded that close 

coordination with its State partners will 

further enhance both servicer 

accountability and borrower 

protections. 

Accordingly, the Department has 

considered the matter further and finds 

that the approach taken in the 2018 

interpretation is seriously flawed. For 

all the reasons stated in this 

interpretation, the Department is 

affirmatively changing its approach to 

preemption of State student loan 

servicing laws that was laid out in the 

2018 interpretation. To the extent that 

the final section of the 2018 

interpretation purported to provide 

additional factual material intended to 

justify its position, those underpinnings 

are examined more carefully below, and 

the Department concludes that they do 

not support the 2018 interpretation 

either as a historical matter or, as a 

factual matter, in the likelihood that 

such an exclusionary approach will 

succeed in attaining its stated 

objectives. See, e.g., FCC v. Fox 

Television Stations, Inc., 556 U.S. 502 

(2009) (agency may change prior policy 

without being subject to any more 

searching judicial review where the 

agency acknowledges the change of 

position and accounts for any claimed 

factual underpinnings of the prior 

policy). 

As a historical matter, the Federal 

government and the States have sought 

to work closely and cooperatively in 

certain areas of shared responsibility, 

such as law enforcement and consumer 

protection. All parties recognize that the 

country is vast, its population has 

grown to immense proportions, and 

public resources are limited. 

Administration of Federal student loans 

involves managing customer 

relationships for tens of millions of 

borrowers in a variety of circumstances 

and for distinct loan programs with 

different requirements that have grown 

up over the past several decades. The 

complexity and scope of the task is 

shown by the Department’s 

longstanding practice of engaging large 

private contractors operating 

nationwide to service millions of 

borrowers with cumulative debts that in 

the aggregate now exceed $1.5 trillion. 

Managing these outside contractors to 

assure that the student loan program 

operates effectively and in line with its 

intended objectives is a substantial 

undertaking, and the oversight 

challenges are evident and significant. 

The Department recognizes that 

collaboration with the States can supply 

the means to ensure better oversight of 

these contractors and provide more 

protection for student loan borrowers. 

Not all States have invested resources in 

overseeing loan servicers, but to the 

extent that they have, some State 

attorneys general and State student loan 

servicing regulators, with their own 

capacities and personnel, are able to 

maintain a closer perspective on how 

these loan servicers operate in their 

States, including how borrowers are 

being treated and how their needs are 

being met. Although the 2018 

interpretation strove to justify how the 

Department could perform this 

oversight task adequately on its own, a 

different approach may be more likely 

to succeed: A coordinated partnership 

of interested Federal and State officials 

could produce a more robust system of 

supervision and enforcement to monitor 

and improve performance under this 

far-flung system. 

In the 2018 interpretation, the 

Department explained as a factual 

matter how it would seek to monitor 

servicer compliance with contractual 

requirements related to customer 

service, including call monitoring, 

process monitoring, and servicer 

auditing. See 83 FR 10622. It also 

described how it uses contracting 

requirements to incentivize improved 

customer service and maintain 

mechanisms for reviewing and 

responding to complaints about 

customer service. But the Department’s 

limited resources for compliance 

monitoring must also encompass 

various other issues unrelated to 

customer service, such as compliance 

with billing practices and other related 

operational issues. And many of the 

recently enacted State laws are designed 

to focus squarely on customer service 

issues: Servicers engaging in unfair, 

deceptive, or fraudulent acts or 

practices; servicers misapplying 

payments; servicers reporting inaccurate 

information on borrower performance to 

credit bureaus; and servicers refusing to 

communicate with borrowers’ 

authorized representatives. See, e.g., 

Conn. Gen. Stat. § 36a–850 (2016); 110 

Ill. Comp. Stat. 992/20–20(i) (2018); 

Colo. Rev. Stat. § 5–20–109 (2019). 

Notably, a growing number of States are 

taking the trouble to enact these laws 

because of the documented need for 

more attention to problems adversely 

affecting their citizens. Rather than 

viewing this activity by the States as 

inconvenient or detrimental to its 

objectives, the Department now 

recognizes that State regulators can be 

additive in helping to achieve the same 

objectives championed in the 2018 

interpretation. Rather than expending 

time and effort contesting the authority 

of the States in unproductive litigation, 

the Department intends to work with 

the States to share the burdens and costs 

of oversight to ensure that loan servicers 

are accountable for their performance in 

better serving borrowers. 

Indeed, a collaborative approach 

where Federal and State officials work 

together to achieve shared objectives 

will likely produce a sum that is greater 


lotter on DSK11XQN23PROD with RULES1
44282 Federal Register / Vol. 86, No. 153 / Thursday, August 12, 2021 / Rules and Regulations 

than its individual parts. The 

Department’s budget is not unlimited 

and maintaining effective oversight of 

student loan servicers that deal with 

tens of millions of borrower accounts is 

a mammoth task. Further examples 

discussed in the 2018 interpretation 

only underscore this point. For instance, 

the Department has built incentives into 

the servicer contracts to favor betterperforming servicers at the expense of 

poorer-performing ones, to attain higher 

levels of customer satisfaction. See id. 

But by the same token, regulatory 

oversight by the States is likewise 

intended and designed to secure higher 

levels of servicer performance and to 

limit instances of poor customer service 

and other abuses through different 

mechanisms and channels. The same is 

true of the other example highlighted in 

the 2018 interpretation, which explains 

how the Department’s formal complaint 

process can help borrowers elevate 

customer service issues for heightened 

attention and prompt resolution. See id. 

But as with the Department itself, State 

regulators and State attorneys general 

have staff members who are typically 

available to field and respond to 

complaints. Here again, the cumulative 

force of combining these joint efforts 

augments, rather than detracts from, the 

goal of improving customer service. 

The concept of ‘‘cooperative 

federalism’’ laid out here can and 

should also lead to mutual efforts to 

make improvements in other areas of 

student loan servicing that support 

greater access to higher education. The 

core purpose of State laws and 

regulations overseeing student loan 

servicers is to protect their citizens who 

are borrowers of student loans and their 

families. The reason they took out those 

loans in the first place was to secure the 

benefits of higher education and to cope 

with the financial costs involved. 

Consideration of these broader 

objectives reveals many opportunities 

for productive cooperation that can be 

fruitfully pursued between Federal and 

State officials who share these 

objectives and are interested in pursuing 

them jointly. In short, an approach that 

is marked by Federal-State cooperation 

is likely to secure better implementation 

of student aid programs as well as better 

service to borrowers and their families. 

Out of this cooperation may come a 

broader understanding of how these 

mutual efforts can advance the central 

goal of facilitating affordable access to 

higher education for students in every 

part of the country. For these reasons, 

the Department is issuing this 

interpretation with the explicit purpose 

of revoking and superseding the 2018 

interpretation. 

Accessible Format: On request to the 

contact person listed under FOR FURTHER

INFORMATION CONTACT, individuals with 

disabilities can obtain this document in 

an accessible format. The Department 

will provide the requestor with an 

accessible format that may include Rich 

Text Format (RTF) or text format (txt), 

a thumb drive, an MP3 file, braille, large 

print, audiotape, or compact disc, or 

other accessible format. 

Electronic Access to This Document: 

The official version of this document is 

the document published in the Federal 

Register. You may access the official 

edition of the Federal Register and the 

Code of Federal Regulations via the 

Federal Digital System at 

www.govinfo.gov. At this site you can 

view the document, as well as all other 

documents of this Department 

published in the Federal Register, in 

text or Portable Document Format 

(PDF). To use PDF you must have 

Adobe Acrobat Reader, which is 

available free at the site. 

You may also access documents of the 

Department published in the Federal 

Register by using the article search 

feature at www.federalregister.gov. 

Specifically, through the advanced 

search feature at this site, you can limit 

your search to documents published by 

the Department. 

Miguel Cardona, 

Secretary of Education. 

[FR Doc. 2021–17021 Filed 8–11–21; 8:45 am] 

BILLING CODE 4000–01–P 

SURFACE TRANSPORTATION BOARD 

49 CFR Part 1002 

[Docket No. EP 542 (Sub-No. 29)] 

Fees for Services Performed in 

Connection With Licensing and 

Related Services—2021 Update 

AGENCY: Surface Transportation Board. 

ACTION: Final rule. 

SUMMARY: The Board updates for 2021 

the fees that the public must pay to file 

certain cases and pleadings with the 

Board. Pursuant to this update, 87 of the 

Board’s 135 fees will decrease, 3 fees 

will increase, and 45 fees will remain at 

their current levels. 

DATES: This final rule is effective 

September 11, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Laura Mizner, (202) 245–0318, or 

Andrea Pope-Matheson, (202) 245–0363. 

[TDD for the hearing impaired: 1–800– 

877–8339.] 

SUPPLEMENTARY INFORMATION: The 

Board’s regulations at 49 CFR 1002.3(a) 

provide for an annual update of the 

Board’s entire user-fee schedule. Fees 

are generally revised based on the cost 

study formula set forth at 49 CFR 

1002.3(d), which looks to changes in 

salary costs, publication costs, and 

Board overhead cost factors. Applying 

that formula, 87 of the Board’s 135 fees 

will decrease, 3 will increase, and 45 

will remain at their current levels. 

Additional information is contained 

in the Board’s decision. To obtain a free 

copy of the full decision, visit the 

Board’s website at www.stb.gov or call 

(202) 245–0245. [Assistance for the 

hearing impaired is available through 

Federal Relay Service: (800) 877–8339.] 

List of Subjects in 49 CFR Part 1002 

Administrative practice and 

procedure, Common carriers, Freedom 

of information. 

Decided: August 4, 2021. 

By the Board, Board Members Begeman, 

Fuchs, Oberman, Primus, and Schultz. 

Kenyatta Clay, 

Clearance Clerk. 

For the reasons set forth in the 

preamble, title 49, chapter X, part 1002, 

of the Code of Federal Regulations is 

amended as follows: 

PART 1002—FEES 

■ 1. The authority citation for part 1002 

continues to read as follows: 

Authority: 5 U.S.C. 552(a)(4)(A), (a)(6)(B), 

and 553; 31 U.S.C. 9701; and 49 U.S.C. 1321. 

Section 1002.1(f)(11) is also issued under 5 

U.S.C. 5514 and 31 U.S.C. 3717. 

■ 2. Section 1002.1 is amended by 

revising paragraphs (a), (b), and (c) to 

read as follows: 

§ 1002.1 Fees for records search, review, 

copying, certification, and related services. 

* * * * * 

(a) Certificate of the Records Officer, 

$20.00. 

(b) Services involved in examination 

of tariffs or schedules for preparation of 

certified copies of tariffs or schedules or 

extracts therefrom at the rate of $48.00 

per hour. 

(c) Services involved in checking 

records to be certified to determine 

authenticity, including clerical work, 

etc. incidental thereto, at a rate of 

$33.00 per hour. 

* * * * * 

■ 3. In § 1002.2, revise paragraph (f) to 

read as follows: 

* * * * * 

(f) Schedule of filing fees. 


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