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BE SMART ABOUT: BETSY DEVOS - Makes it Harder to Pay Back Student Loans
BE SMART ABOUT is our unfortunate series highlighting examples of those in power who you need to stay informed about so you can share this knowledge and together we can Be Smart and Actively Dissent.
Today we discuss a recent action of Secretary of Education Betsy DeVos, who will be a repeat participant in the BE SMART ABOUT series.
In early February, Betsy DeVos was confirmed as Education Secretary. Two Republicans, Senators Murkowski (AK) and Collins (ME), joined the entire Democratic caucus to force an historic tie-breaking vote from Vice President Pence. Read more at this link. Her installation to a position of power over our education system means she spends every day implementing policies with destructive consequences for our country.
On Tuesday, Education Secretary Betsy DeVos eliminated programs intended to make it easier for borrowers to pay back their student loans.
Former Obama administration Secretary of Education John King put the program in place last June.... to examine student loan servicers’ past performance before renewing the companies’ contracts. The program helped to hold student loan servicers accountable. Student loan servicers are companies that have contracts with the federal government to manage loan repayments.
Through a memorandum, DeVos withdrew that guidance, as well as a directive from former Education Department undersecretary Ted Mitchell that required servicers meet certain standards for responding to and assisting borrowers.
Researchers at the Government Accountability Office found that 70 percent of people in default actually qualified for a lower monthly payment through income-driven plans that cap monthly payments to a percentage of earnings but that servicers failed to provide sufficient information.
The CFPB, in particular, has documented instances of servicing companies providing inconsistent information, misplacing paperwork or charging unexpected fees. Because the federal government pays hundreds of millions of dollars to companies such as Navient, Great Lakes and American Education Services to manage $1.2 trillion in student loans, advocacy groups and lawmakers argue that more should be required of these contractors.
For example, the case of Navient tells the entire story:
One of the biggest student loan servicers in the country, Navient, is being sued by the CFPB and Washington state for their allegedly sloppy management of student loan repayments. In response to the suit, Navient responded that “there is no expectation that the servicer will act in the interest of the consumer.”
One in four federal student loan borrowers has Navient as their servicer, according to the CFPB. Thanks to the reversal of this guidance, it’s more likely that Navient will receive a new contract in 2019.
Be Smart about Betsy DeVos. Actively Dissent.
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