More on DeVos’ Decision to Cancel Protections for Students Lenders

From Politico Education (yesterday):

CONSUMER AND LABOR GROUPS BLAST DEVOS’ DECISION TO SCRAP OBAMA-ERA OVERHAUL OF STUDENT LOAN SERVICING. On Tuesday, DeVos halted Obama-era plans to overhaul how millions of student borrowers pay back their federal loans including new consumer protections for borrowers and contract provisions aimed at boosting the quality of federal loan servicing. Sen. Elizabeth Warren (D-Mass.), called the change a “gut punch” to the nation’s student loan borrowers because the policies would have made it harder for companies to cheat borrowers. Persis Yu, director of National Consumer Law Center’s Student Loan Borrower Assistance Project, said DeVos is walking away from “common-sense protections.”

— Randi Weingarten, president of the American Federation of Teachers called the move “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.”

— In a memo, DeVos wrote that it was necessary to scrap the plans because of “a myriad of moving deadlines, changing requirements and a lack of consistent objectives” and a need to move forward “with precision, timeliness and transparency.” The Obama administration’s plan had called for a streamlined loan servicing platform in which borrowers make payments through a single web portal, rather than going through individual loan companies. The first phase of that project was initially slated to be finished by the end of 2016 but was delayed until this past February.

— “This increases the stakes for the CFPB to write clear rules to solve the problems in the loan servicing market,” said Rohit Chopra, the bureau’s former student loan ombudsman, who criticized the decision. “If the Education Department won’t use its buyer power to clean up bad practices, law enforcement has to step in.”

— The Education Department did not consult with the Consumer Financial Protection Bureau, which helped craft the policy guidance, before withdrawing it, according to a CFPB spokesman. “Borrowers deserve to be treated fairly and should be able to repay their debt without having to deal with illegal loan servicing practices,” the spokesman told Morning Education. “The CFPB will continue to find ways, working with all of our partners, to support and protect the 44 million Americans with student debt.”

from sarah


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