Education Secretary Betsy DeVos Strikes Down Protections For Student Loan Borrowers
Who is she working for?
During the Obama administration, 8.7 million Americans defaulted on their student loans. In 2010, to stop the wave of defaults, Obama overhauled the student loan program, forcing many commercial banks out of the student loan business. In 2013, he took another step toward alleviating the problem by signing legislation that significantly reduced the interest rates on student loans.
Last summer, the Department of Education released new guidelines to improve customer service and enhance protections for student loan holders. The guidelines strengthened federal oversight of government contractors that handle billing and collections. “For some student loan borrowers, high-quality servicing can be the difference between getting by and going broke,” Richard Cordray, director of the Consumer Financial Protection Bureau, said. “But for too many consumers, this level of service has proved elusive.”
On Wednesday, Secretary of Education Betsy DeVos withdrew last year’s consumer protection guidelines, saying the protections “impede our ability to ensure borrowers do not experience deficiencies in service.” But critics believe that DeVos’ decision only makes things worse for borrowers. “It is utterly baffling that Secretary DeVos would undo guidance that asks servicers to do the basic things that anyone—literally anyone—would expect a loan servicer to do, like respond to questions and help people access repayment plans they have a legal right to use,” Suzanne Martindale, policy counsel for Consumers Union, said.