Opinion ID: 4524544
Heading Depth: 1
Heading Rank: 1

Heading: student loan regulation

Text: Congress enacted the HEA, the primary statute governing federal student loans, “to keep the college door open to all students of ability, regardless of socioeconomic background.” Rowe v. Educ. Credit Mgmt. Corp., 559 F.3d 1028, 1030 (9th Cir. 2009) (internal quotation marks omitted); see also 20 U.S.C. § 1070(a). To fulfill this goal of improving access to higher education, the HEA established the Federal Family Education Loan Program (“FFELP”). See 20 U.S.C. § 1071. Under the FFELP, lenders used their own funds to make loans, known as FFEL loans, to students attending postsecondary institutions. These loans were guaranteed by private guarantors and reinsured by the federal government. See id. § 1078(a)-(c). Although the federal government did not directly fund these loans, it served as the ultimate guarantor of the loans through the reinsurance program. 1 Lenders for FFEL loans contracted with loan servicing companies to manage borrowers’ repayment of the loans. 1 In 2010, the government stopped reinsuring new FFEL loans. 20 U.S.C. § 1071(d). 3 Case: 18-14490 Date Filed: 04/10/2020 Page: 4 of 31 In time, Congress shifted away from the FFELP to the William D. Ford Federal Direct Loan Program. See id. §§ 1087a-1087j. Under this program, the federal government itself served as the lender, directly providing the funds for student loans. Because the federal government directly provided the funds for these loans, they aptly became known as “direct loans.” Id. § 1087a(b)(2). The government contracted with non-government entities to service direct loans. To encourage student loan recipients to enter and remain employed in public service jobs, Congress created the Public Service Loan Forgiveness Program (“PSLF” or the “PSLF Program”), to forgive direct loan balances for borrowers employed in government or not-for-profit organizations. See College Cost Reduction and Access Act, Pub. L. No. 110-84 § 401, 121 Stat. 784, 800 (2007). Under the PSLF Program, the federal government forgives outstanding student loan balances for borrowers who: (1) made 120 payments on their loan after October 1, 2007; (2) made these payments on an eligible direct loan; (3) were on a qualifying repayment plan; and (4) were employed in public service at the time of the loan forgiveness and had been employed in public service during the period in which the 120 payments were made. 20 U.S.C. § 1087e(m)(1). A key requirement of the PSLF Program is that the 120 payments must be made on an “eligible Federal Direct Loan.” Id. § 1087e(m). Congress defined an “eligible Federal Direct Loan” to include “a Federal Direct Stafford Loan, Federal 4 Case: 18-14490 Date Filed: 04/10/2020 Page: 5 of 31 Direct PLUS Loan, or Federal Direct Unsubsidized Stafford Loan, or a Federal Direct Consolidation Loan.” Id. § 1087e(m)(3)(A). Borrowers with other types of federal student loan debt—including FFEL loans—are ineligible for the PSLF Program. Borrowers with FFEL loans are not entirely out of luck, however. They may consolidate their loans into a Federal Direct Consolidation Loan to become eligible. See id. §§ 1078-3(b)(5); 1087e(m)(3)(A). But any payments they made before consolidation do not count toward the 120 payments required for the program. The HEA also imposes obligations on student loan lenders and loan servicers.2 Most relevant to the Borrowers’ claims here are the requirements that lenders and servicers make various disclosures to borrowers. See id. § 1083. Although the HEA does not define the term “disclosure,” it specifies the information that must be disclosed and when the disclosures must occur. Id. § 1083(a)-(b), (e). The HEA mandates disclosures at or during particular points in time, including: (1) at or before the disbursement of loan proceeds (19 required disclosures); (2) at or before the start of repayment (13 required disclosures); and (3) periodically during repayment. See id. § 1083(a)-(b), (e). Certain information must be provided with each bill or statement sent to the borrower, including the 2 Direct loans are subject to the “same terms, conditions, and benefits” as loans issued under the FFELP. 20 U.S.C. § 1087e(a)(1). 5 Case: 18-14490 Date Filed: 04/10/2020 Page: 6 of 31 original principal amount of the loan, the borrower’s current outstanding loan balance, the loan’s interest rate, and the total amount the borrower has paid in interest and in the aggregate. Id. § 1083(e)(1). Additional information must be disclosed when the borrower either has provided notice that she is having difficulty making payments or is 60 days delinquent in making payments. See id. § 1083(e)(2)-(3). Along with imposing these disclosure requirements, the HEA expressly preempts the imposition of state law disclosure requirements. Section 1098g, entitled “Exemption from State disclosure requirements,” provides: Loans made, insured, or guaranteed pursuant to a program authorized by Title IV of the [HEA] . . . shall not be subject to any disclosure requirements of any State law. Id. § 1098g.