Federal: AFC Letter Requesting Clarity of Scope on Stop Act

June 12, 2025
The Honorable Linda McMahon
Secretary of Education
U.S. Department of Education
400 Maryland Avenue SW
Washington, DC 20202

Re: Request for Public Clarification Regarding the Stop Student Debt Relief Scams Act of 2019 and Legitimate Financial Management Tools

Dear Secretary McMahon:

On behalf of the American Fintech Council (AFC),  I am writing to respectfully request that the Department of Education issue a public statement or guidance that the Stop Student Debt Relief Scams Act of 2019 (Stop Act or the Act) does not prohibit legitimate transactions and financial management tools utilized by student loan borrowers.

AFC’s mission is to promote an innovative, transparent, inclusive, and customer-centric financial system by fostering responsible innovation in financial services and encouraging sound public policy. AFC members are at the forefront of fostering competition in consumer finance and pioneering ways to better serve underserved consumer segments and geographies. Our members are also improving access to financial services and increasing overall competition in the financial services industry by supporting the responsible growth of lending and lowering the cost of financial transactions, allowing them to help meet demand for high-quality, affordable financial products. Specifically, within the student lending space, AFC represents a broad coalition of stakeholders, including innovative student loan originators, servicers, banks, and financial technology (fintech) companies. AFC seeks pragmatic policymaking that ensures student loan borrowers, and their families are properly served throughout the lending and repayment processes.

AFC recognizes and appreciates the underlying intent of the Act to minimize access to borrowers’ data, and we fully support the Act’s prohibition and punishment of fraudsters who illicitly obtain borrower credentials. As evidenced by a review of the Stop Act’s text of Congress’ intent for the legislation, the Act was meant to combat schemes including entities obtaining “power of attorney” from borrowers to manage their student loans and then perpetrating activities that were not in the borrower’s best interest, as well as other fraudulent student debt relief schemes that exploit vulnerable borrowers.  A key provision of the Act prohibits unauthorized access to Department of Education information technology systems for commercial advantage or private financial gain. The definition of unauthorized access broadly includes the use of another person’s login credentials to access these systems.

However, the statute should not be read to prohibit legitimate use of a borrower’s credentials with their clear permission. Providers of legitimate innovative financial management tools obtain borrowers’ explicit permission to access information about their existing student loan from Federal Student Aid (FSA) systems and servicers. This access is authorized by the borrower. Yet, the possibility that the overly-broad language of the Stop Act could be applied to an authorized transaction with the borrower’s permission has inadvertently disrupted the use and operation of legitimate financial management tools that provide significant benefits to borrowers.

Several examples show the benefits to student loan borrowers. Use of financial management tools enables borrowers to manage their student debt with data integrity and convenience of automated tools. Another example is when a lender assisting a borrower to refinance his or her student loan may use a service that obtains the customer’s permission to verify the borrower's existing loan. Employers seeking to make contributions under the CARES Act of 2020 to employees’ student loans and under the Secure Act to their employees’ 401(k) retirement accounts rely on systems that verify the loan payments - a process interrupted and made more expensive by the uncertainty we are asking the Department to address.

In addition to the benefits discussed above, ensuring the operation of legitimate financial management tools aligns closely with the administration’s goals promoting the advancement of fintech and reducing the regulatory burdens associated with operating in the financial services sector. Specifically, responsible innovators in the student lending space could obtain parity with consumer-demanded open banking products and services available in other parts of the financial services industry, ultimately affording consumers an improved experience in their engagement with their finances.

While the Department of Education previously issued a statements detailing that the penalties in the “Stop Act only apply to those who access systems for the purposes of “obtaining criminal advantage or private financial gain, or in furtherance of any criminal or tortious act,”’ and outlining requirements for access, the guidance did not explicitly permit innovative third parties to access their customers’ information with the customer’s express.  Unfortunately, due to this lack of clarity by the Department of Education, market participants have feared of running afoul of the Stop Act. Further, this fear has led innovative federal student loan servicers to curtail legitimate data access efforts. In turn, this has stymied the growth and adoption of the aforementioned consumer benefits.

The nuanced schemes that the Act sought to stop requires an equally nuanced approach from the Department. Specifically, to remedy this lack of clarity, we request that the Department of Education issue a public statement or guidance that the Stop Act does not prohibit legitimate transactions and financial management tools utilized by student loan borrowers. The Department’s guidance on this issue would address this unintended consequence and protect borrowers. We respectfully request the Department of Education issue a public statement that the Stop Act prohibits illicit and deceptive uses of borrowers’ login credentials and does not prohibit entities that legitimately use borrowers’ login credentials to access student loan data with the borrowers’ clear permission.

Concurrent with the requested public statement, AFC respectfully requests that the Department’s guidance also address the following details to ensure that the schemes noted above are not allowed to return while also allowing for legitimate uses of the data are encouraged:

• Defining what constitutes a “legitimate organization” and “legitimate use case” for borrower data in a manner that ensures only organizations committed to operating in the borrower’s best interest are able to access the data;

• Developing an application program interface (API) or other data portal that grants for “read-only” access of borrower data by “legitimate organizations” and ensures that no entity may edit or modify borrower data.

• Developing educational efforts to assist borrowers in understanding potential schemes that may seek to defraud them or operate in a manner contrary to their best interests.

AFC believes that the guidance and programmatic efforts discussed above would be consistent with the Department’s previous actions in interpreting the Stop Act. Further, these actions would provide much-needed clarity to the industry, while also ensuring that borrowers retain access to transactions and tools that empower them to manage their student loan debt effectively. We welcome the opportunity to work with the Department to ensure proper guardrails are in place to protect borrowers from nefarious actors while also giving them access to responsible innovations that can assist them in achieving their financial goals.  

We appreciate your attention to this important matter and look forward to your timely response.

Sincerely,

Ian P. Moloney
SVP, Head of Policy and Regulatory Affairs
American Fintech Council

‍

[1] American Fintech Council’s (AFC) membership spans EWAproviders, lenders, banks, payments providers, loan servicers, credit bureaus,and personal financial management companies.
[2] 18U.S.C.1029.See also, U.S. Department of Justice, Justice Manual: 1-19.000- Principles for Issuance and Use of Guidance Documents, (last updated, April 2022), available at  https://www.justice.gov/jm/1-19000-limitation-issuance-guidance-documents-1.
[3] Stop Student Debt Relief Scams Act of 2019, S. 1153, 116^th Cong., 2^ndsess., Congressional Record 166, No. 206
(Dec. 7, 2020): H 6880-6883, available at https://www.congress.gov/congressional-record/volume-166/issue-206/house-section/article/H6880-1.
[4] Department of Education, Federal Student Aid, “Update on Stop Student Debt Relief Scams Act (STOP Act) Implementation”, General-21-59,(Sep. 23, 2021), available at https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-09-23/update-stop-student-debt-relief-scams-act-stop-act-implementation. Department of Education, Federal Student Aid, “Third-Party Access to the Department's Information Technology Systems and Notice of Criminal Penalties for Misuse of Access Devices,” Fed. Reg. 86, no. 214(Sep. 10, 2021): 50707, available at https://www.govinfo.gov/content/pkg/FR-2021-09-10/pdf/2021-19536.pdf.