Five Ways Betsy DeVos and Her Congressional Cronies Mined Money Out of Borrowers in 2017

By: Senya Merchant

Secretary of Education Betsy DeVos is both one of the most well-known and, according to an unofficial New York Times reader poll, least-liked Trump cabinet appointees. She started off the year with a contentious and gaffe-filled nomination hearing and quickly made known her dislike of public schools. She also charged straight into making life worse for both current and future student loan borrowers. Here’s a look at just some of the damage incurred on borrowers single-handedly by Sec. DeVos this year.

1. Trashed the “Mitchell Memos”: Secretary DeVos kicked off her tenure at the Department of Education by rescinding policy recommendations made by former Undersecretary of Education Ted Mitchell. These memos would’ve held federal student loan servicers to higher customer service standards and put in place financial incentives for companies to do targeted outreach to borrowers at high risk of default. By having servicing companies compete for government contracts based on customer-service ratings and past performance metrics, the Department would’ve been able to effectively weed out servicers that were poor performers or those that broke the law. Without these memos being implemented, borrowers are stuck with the same lawbreakers that overcharged 78,000 members of the military on their loans and made billions of dollars in interest by wrongfully steering borrowers into forbearance instead of income driven repayment plans.
2. Stacked the Department of Education with for-profit industry executives: Between Robert Eitel, Julian Schmoke, and Wayne Johnson, Secretary DeVos has abandoned impartial expertise for industry insiders that are calling the shots on major issues related to for-profit colleges and loan servicers. The more cheerleaders the for-profit college industry has on the inside, the easier it will become for for-profits to be even bolder in their evasion of the rules that are supposed to keep them accountable.
3. Gave student debt collectors permission to kick defaulters when they were already down: DeVos rolled back an Obama-era rule that prohibited student debt collectors from charging fees to defaulted borrowers who quickly resumed repaying their loans. Three-thousand Americans default on their student loans every day—tacking on huge fees to go back into repayment only makes climbing out of the deep hole of default and tarnished credit that much harder.
4. Processed exactly zero refund applications for cheated students: As of publication time, close to 100,000 cheated had students filed claims to receive the refunds owed to them because of school closures or school fraud. It’s been 11 months since Secretary DeVos has taken up the mantle at the Department of Education yet she hasn’t spent a single one of those days putting money back into the hands of defrauded students.
5. Stopped enforcing rules that would cut off taxpayer funds from propping up low-value career education programs: Despite 17 attorneys general suing the DeVos Department of Education for illegally pausing these rules, her administration continues to funnel federal funds to programs that leave students with more debt than their degrees will ever allow them to repay. The longer these programs are allowed to enroll students without informing them of the poor outcomes their program has generated, the worse our $1.4 trillion student debt crisis will become.

We’d be remiss not to mention that DeVos and her congressional cronies are closing out the year with a grand finale of disdain for students and borrowers—the recently proposed Higher Education Act, dubbed the “PROSPER Act,” will gut the Public Service Loan Forgiveness program, replace all income driven repayment plans with a single plan that doesn’t offer forgiveness, and could potentially allow the federal government to block states from being better cops for consumers. We weren’t here for it in 2017 and we sure will be holding the line on a lot of these important programs in 2018. Stay up to speed on the action here.