Student Loan Debacle: What Will Be Response from DeVos Department of Education?
The Obama administration had planned to revamp completely the system by which the U.S. Department of Education administers and collects $1.3 trillion in college loans. The service has been terrible and confusing, say consumer advocates, and some of the contractors have been overcharging borrowers with big fees.
Last week the NY Times editorialized: “Education Secretary Betsy DeVos is inexplicably backing away from rules that are meant to prevent federal student loan borrowers from being fleeced by companies the government pays to collect the loans and to guide people through the repayment process. On Tuesday, she withdrew a sound Obama administration policy that required the Education Department to take into account the past conduct of loan servicing companies before awarding them lucrative contracts—and to include consumer protections in those contracts as well.” What this all means is that the federal government, as the enormous provider of loans to help students pay for college, contracts out the servicing of those loans to for-profit companies, which can charge fees for their services. The Obama administration had planned to restructure this process, but the Trump administration has now abandoned the Obama administration’s plan.
The NY Times has been investigating, and here is one of its reports on DeVos’s recent action: “With the stroke of a pen… Betsy DeVos, President Trump’s new education secretary, thrust the future of the government’s system for managing federal student loans into confusion. It was a high-stakes move: Her department administers $1.3 trillion in loans on behalf of nearly 43 million student borrowers. At issue is which companies will handle the bulk of those loans in the future, and how they will do it. Under the Obama administration, the Education Student Loan Debacle: What Will Be Response from DeVos Department of Education? | janresseger:
