The Massachusetts state student loan agency has cut ties with an education finance trade association. 

State student loan agency Massachusetts Educational Financing Authority (MEFA) recently announced that it is discontinuing its membership with a national trade association, according to The Boston Globe.

The National Council of Higher Education Resources (NCHER) is an education finance trade association that offers membership to state, nonprofit, and for-profit higher education groups. NCHER represents its members through its advocacy work to shape public policy on higher education. But recently, this advocacy work has led to claims that the organization is attempting to undercut consumer protections.

A number of different states, including Connecticut, California, and Illinois, have taken steps to enact legislation that is commonly referred to as a “student loan borrower’s bill of rights.” Massachusetts now has similar legislation being drafted.

Such legislation aims to protect borrowers from being misled by their student loan servicers. It also calls for a student loan ombudsman and requires student loan servicers to submit to licensing requirements.

Student loan companies have argued that because they service loans on behalf of the federal government, they shouldn’t have to comply with state regulations. And so far, the Trump Administration has backed up that opinion. Education Secretary Betsy DeVos released a memo announcing that states don’t have the authority to regulate student loan servicers.

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The NCHER also supported the department’s position on this issue.

For that reason, nearly 50 legislators sent a letter to MEFA asking why it is associated with a group that is lobbying to eliminate Massachusetts’ ability to regulate student loan servicers. Senator Eric Lessor, who is leading the charge to regulate student loan servicers in Massachusetts, said he was troubled by the agency’s association with NCHER.

MEFA was created by the Massachusetts state legislature to provide student loans and assist borrowers. In 2017, it paid $12,800 in membership dues to NCHER. In return, NCHER gave them access to conferences and other professional development opportunities.

MEFA spokeswoman Lisa Rooney minimized the role with NCHER, saying that only seven percent of NCHER’s budget is spent on advocacy work, according to MassLive. Rooney added that after reviewing the letter, the agency would comply with the legislators’ request and end its association with NCHER.

Sen. Lesser, who is sponsoring the student loan bill of rights in Massachusetts, praised MEFA’s decision to end its membership with NCHER. He said he’s glad that they chose to protect student loan borrowers and hoped other state agencies would follow suit.