OPINION & ORDER This case concerns the administration of the student loans serviced by the Pennsylvania Higher Education Assistance Agency (“PHEAA”). According to the New York Attorney General (“NYAG”), who brings this suit, PHEAA, the exclusive servicer of loans in the Public Service Loan Forgiveness program, engages in unfair, deceptive, and abusive practices in violation 12 U.S.C. §5531 (Dodd-Frank), fraud and repeated and persistent illegal conduct in violation of New York’s Executive Law §63(12), and deceptive acts and practices in violation of New York’s General Business Law §349. PHEAA moves to dismiss NYAG’s claims, arguing that (1) it is entitled to derivative sovereign immunity under Yearsley v. W.A. Ross Const. Co., 309 U.S. 18 (1940); (2) the claims are barred under the doctrine of intergovernmental immunity; (3) the claims are not ripe for adjudication; (4) the state law claims are preempted by the Higher Education Act (“HEA”); and (5) the NYAG has failed to join the U.S. Department of Education (“DOE”), which it argues is a necessary and indispensable party under Fed. R. Civ. P. 19. PHEAA also claims that the NYAG is not entitled to pursue civil penalties under the Consumer Financial Protection Act. For the forgoing reasons, PHEAA’s motion is GRANTED in part and DENIED in part. I. FACTUAL BACKGROUND The following facts are taken from the Complaint and are presumed to be true for purposes of deciding this motion. A. PHEAA PHEAA is a large student loan servicer, which services approximately 20 percent of the nation’s student debt, including the loans of tens of thousands of New York residents. (Compl.
32, 35). It operates under the names FedLoan Servicing (“FedLoan”) and American Education Services (“AES”). (Id. 7.) FedLoan services direct loans (loans made directly by the federal government) and loans made by the (nowdiscontinued) Federal Family Education Loan Program (“FFEL”) that are owned by the federal government. (Id.) AES services private loans and FFEL loans owned by private entities. (Id.) B. PSLF and IDR Plans The NYAG’s claims focus on, though do not necessarily exclusively pertain to, two programs that PHEAA administers, the Public Service Loan Forgiveness Program (“PSLF”) and income-driven repayment (“IDR”) plans. PSLF was established by Congress in 2007. (Id. 2.) Its aim is to encourage students to work in public service jobs, which are frequently low-paying, by offering student loan forgiveness to those who make 120 monthly payments, while working fulltime for a qualifying public service employer. (Id. 62-64.) Given the terms of the program, fall 2017 was the earliest any borrower could have completed the 120 qualifying payments requirement and seek loan forgiveness under the program. (Id. 73.) As of June 2019, more than 90,000 borrowers applied for loan forgiveness through PSLF, but only approximately one percent had their loans discharged.1 (Id. 75.) PHEAA has an exclusive contract with the U.S. Department of Education (“DOE”) to service loans of borrowers seeking PSLF. (Id. 8.) IDR plans also allow for loan forgiveness. IDR plans are meant to assist borrowers who are struggling financially avoid delinquency and default. (Id. 17.) IDR plans lower monthly payments based on income and household size, and allow for the borrower’s remaining loan balance to be forgiven if the borrower makes payments for a specified period, typically twenty or twenty-five years. (Id.
