Betsy DeVos Rescinds Protections for Student Loan Borrowers: What We and Our Partners Have To Say About That
Americans for Financial Reform: Senior Policy Analyst, Alexis Goldstein
“Americans for Financial Reform strongly condemns the decision today by Secretary Betsy DeVos to rescind three memos that provided for increased consumer protection and servicer accountability. In the letter today, Secretary DeVos wrote that the Department must create a servicing environment that “provides the highest quality customer service and increases accountability and transparency for all borrowers.” But Secretary DeVos’s actions today do precisely the opposite, moving the Department toward less accountability and worse service for student loan borrowers.
The June 30 2016 memo rescinded today instructed Federal Student Aid (FSA) that they had to consider past performance awarding student loan servicing contracts, including whether servicers had “misled, ignored, or provided wrong information” to borrowers or if there was “improper or abusive customer service.” Rescinding this memo opens the door to servicers like Navient earning lucrative new government servicing contracts in spite of past abuses–including illegal acts like overcharging 78,000 members of the military, and charges by both the Consumer Financial Protection Bureau and multiple state attorneys general of steering struggling borrowers toward paying more than they had to on their loans.
And the decision to rescind the July 20, 2016 memo rolls back commonsense consumer protections, such as requirements that servicers provide a higher level of service to the borrowers most at risk of default.
In order to have accountability, there must be real consequences when servicers violate the law. Secretary’s DeVos’s actions today moves us away from true accountability, and creates dangers for the very student loan borrowers the Department is responsible for protecting.”
American Federation for Teachers: President, Randi Weingarten
“Secretary DeVos—with the stroke of a pen—has reinstated the Wild West of student loans where servicers get to play by their own rules, and borrowers get fleeced. Her decision rescinds the most basic protections student debtors have when dealing with servicers, like expecting their bills to be accurate and their payments to be processed on time. And she’s opened the door for rogue operators such as Navient, which overcharged service members and veterans millions of dollars, to win even more lucrative government contracts. If Secretary DeVos were serious about curing America’s trillion dollar student loan crisis, she would strengthen, not rescind, these protections. Instead, she is enabling and empowering bad actors. It’s just another clear example of Betsy DeVos and the Trump administration putting the interests of predatory profiteers over the needs of the little guy—in this instance, the millions of people trying to go to college or acquire career skills without being crippled by debt.”
Generation Progress: Executive Director, Maggie Thompson
“Secretary DeVos’ first actions on student debt prove that her Department prioritizes the financial interest of debt collectors and servicers over the rights of borrowers. Eliminating these safeguards will allow companies to harass borrowers and continue to provide shoddy service. We hear constantly from borrowers who are struggling with their servicers, and we only expect these complaints to intensify with these most recent, regressive rollbacks.”
National Consumer Law Center, Student Loan Borrower Assistance Project: Director, Persis Yu
“It is extremely disappointing to see Secretary DeVos walk away from these common-sense protections for student loan borrowers,” said Persis Yu, director of National Consumer Law Center’s Student Loan Borrower Assistance Project. “Servicers have often not even provided basic information to borrowers, such as an accurate payment history. It’s simply mind-boggling that the Department of Education would take away basic rights for borrowers, which, as we saw with the recent CFPB Navient lawsuit, can result in borrowers paying too much for their loans. As the CFPB lawsuit against Navient demonstrates, problems with servicing are widespread and servicers’ practices can create obstacles to repayment resulting in costly problems for borrowers. Today’s action by Secretary Devos could make it easier for the Department to hire servicers with a track record of harming borrowers. Servicers are a borrower’s primary point of contact. Ideally, they should provide borrowers with accurate and comprehensive information about their options and help them get relief. The reality of the current servicing system, unfortunately, is far from this ideal. For years, National Consumer Law Center staff members have sent examples of poor service and legal violations to the Department of Education and more recently, to the Consumer Financial Protection Bureau (CFPB). The Department of Education should ensure that servicers who work for the taxpayer embrace student loan borrower-centric policies and are held accountable when they fall short, rather than rescinding basic rules that assist strapped borrowers.”
Higher Ed Not Debt
Posted on 12 April 2017