Attorney General Bonta Files Brief in Support of CFPB Effort to Hold Student Loan Trust Accountable for Illegal Debt Collection Practices

Tuesday, November 15, 2022
Contact: (916) 210-6000,

OAKLAND – California Attorney General Rob Bonta, as part of a bipartisan coalition, filed a brief yesterday in support of the Consumer Financial Protection Bureau’s (CFPB) interpretation that student loan trusts are “covered persons” under the Consumer Financial Protection Act. The brief supports the CFPB in its case against the National Collegiate Student Loan Trusts (Trusts) for engaging in illegal debt collection of student loans. In 2017, the CFPB sued the Trusts for unlawful debt collection practices, alleging that subcontractors for the Trusts submitted false and misleading affidavits and testimony in support of more than 90,000 collection actions, among other violations. In today’s brief, the attorneys general argue that the Trusts are liable under the Consumer Financial Protection Act for misconduct in servicing the student loans that they own, even if that servicing is performed by contractors on behalf of the Trusts. 

“Debt buyers and other creditors can’t evade liability by simply hiring a third-party to break the law for them,” said Attorney General Bonta. “Millions of student loan borrowers have felt the crushing weight of writing out a three- or even four-digit check each month, and been forced to make tough choices about which bills they can afford to pay. The illegal and aggressive debt collection practices utilized to collect loans owned by the National Collegiate Student Loan Trusts put these hardworking Americans at an insurmountable disadvantage. The CFPB is right to hold this supposedly 'passive' debt collector accountable for the illegal conduct undertaken on its behalf.”

In the brief, the attorneys general argue in support of the CFPB and the district court’s finding that the Trusts engage in student loan servicing when they contract with third party agents to collect and service the debt they’ve purchased, and are therefore liable under the Consumer Financial Protection Act. The Trusts are passive debt purchasing entities that profit only when the third parties that they have hired are able to collect on flawed debt portfolios that have been deemed uncollectable for a variety of reasons – incentivizing the use of unlawful tactics to collect on the debt. In response, many states, including California, have applied their prohibitions on unlawful debt collection to all creditors, including debt buyers. The CFPB’s decision to do the same is consistent with the Consumer Financial Protection Act's purposes and Congressional intent. 

Attorney General Bonta is committed to protecting student loan borrowers and holding for-profit schools accountable. Earlier this year, Attorney General Bonta obtained a judgment against Ashford University and its parent company Zovio for defrauding California students. The Attorney General also secured a multistate settlement against student loan service Navient resolving allegations of misconduct in the servicing and collection of federal student loans. Last year, Attorney General Bonta announced the successful resolution of litigation against the Department of Education (ED) after the Biden Administration committed to fixing the broken Public Service Loan Forgiveness programs. The improvements followed a lawsuit and yearslong advocacy by California and others urging ED to take robust action to fix the program. 

Attorney General Bonta is joined by the attorneys general of Illinois, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Idaho, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Virginia, Washington and Wisconsin.

A copy of the brief is available here.

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