Betsy DeVos Undercuts Student Loan Protections Previously Put In Place By President Obama
If you've got some student loans lingering — or are parent to a student with forthcoming loans of their own — then you won't want to miss reviewing recent measures by President Donald Trump's education secretary. On Tuesday, Betsy DeVos undercut student loan protections that were previously put in place by President Barack Obama's administration. Obama's series of memos were put forth to "strengthen consumer protections," The Washington Post reported, keeping borrowers as safe as possible in order to prevent defaulting. Now, these protections are gone.
The Chronicle of Higher Education's blog explains that the Obama-era memos included "efforts to improve communication between servicers and borrowers, giving servicers economic incentives to aid borrowers, and expectations regarding the transparency of data related to the servicing industry." Essentially, the Obama memos worked to assure that the Federal Student Aid office worked to help borrowers responsibly manage their debt. One of the scrapped measures previously required that it be taken into account if "the company had misled or provided wrong information to borrowers or engaged in abusive consumer service" before the company is approved.
In a press memo on the subject, DeVos stated that she insisted upon doing away with old Obama-era measures in order to "improve outcomes and experiences for federal student loan borrowers, as well as demonstrate sound fiscal stewardship of public dollars." DeVos claimed that Obama's approach was inconsistent and full of shortcomings, though she didn't elaborate further on how exactly she found the previous administration to be ineffective.
She advocated further for her position, saying:
We must create a student loan servicing environment that provides the highest quality customer service and increases accountability and transparency for all borrowers, while also limiting the cost to taxpayers.
Recent allegations against student loan providers have unearthed a lot of shady practices, with experts concluding that the "loans were designed to fail" so that, while the borrowers suffer, the lenders profit. Assessing the potential of these rollbacks, this decision "will certainly increase the likelihood of default," David Bergeron, a senior fellow at the Center for American Progress with over 30 years of experience in the Education Department, told The Chicago Tribune.
In undercutting these student loan protections, DeVos appears to be putting the wants of loan providers ahead of the needs of students and borrowers. Seeing that DeVos has not even proposed any probable replacement of protective measures, borrowers are more vulnerable than ever.