Betsy DeVos speaking with Kayleigh McEnany at the 2017 Conservative Political Action Conference.
Borrowers struggling with student loan debt might be in for even more of a struggle now that Betsy DeVos, the newly appointed Education Secretary, formally withdrew memorandums by the Obama administration that helped students deal with their education debt according to a document released by the Department of Education.
Some officials believe that the move will increase the number of loan defaults; additionally, some officials claim this is proof that protecting student loan borrowers is not a priority for Secretary DeVos.
The Obama administration aimed to change the way student loan servicing companies collected payments by requesting that the government’s Federal Student Aid office do more to help borrowers manage, or even dismiss, student loan debt. But DeVos claims that the Obama administration’s approach was “inconsistent and full of shortcomings.”
Furthermore, Secretary DeVos claims that her goal is to “create a student loan servicing environment that provides the highest quality customer service and increases accountability and transparency for all borrowers, while also limiting the cost to taxpayers.” At any rate, the current student loan bill causes some concern from taxpayers.
According to The Student Loan Report, 44 million Americans owe more than $1.4 trillion in student loan debt—about $620 billion more than the total U.S. credit card debt. During Obama’s presidency, some 8.7 million Americans defaulted on their student loans which is roughly one default every 29 seconds.
With so many Americans in distress over their student loan debt, the Obama administration wanted to put an emphasis on how borrowers are treated—and find ways to help them—rather than just focus on how to get payments from them. And with the current round of contracts expiring in 2019, they also wanted to make sure new contracts wouldn’t be handed out to companies that would mislead or otherwise harm debtors.
It’s important to note that one of the companies in the running to take over the contracts is Navient, which is currently embroiled in a federal lawsuit, alleging that the student loan servicer "systematically and illegally" failed borrowers. The rollback on the prior administration’s guidelines most likely makes Navient a stronger contender in the case.
Image Copyright © Gage Skidmore