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Federal Register / Vol. 86, No. 153 / Thursday, August 12, 2021 / Rules and Regulations
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and devoid of analysis, offering nothing more than a retroactive, ex-post rationalization for DOEDs 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 Departments 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
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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 & Devt Commn, 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.

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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 powerthat Federal law preempts the entire field of law relating to Federal student loan servicinghas 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, 94142 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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