DeVos rescinds Obama protections for borrowers
EDITOR'S NOTE: These changes benefit student loan giant Navient which is one of Rhode Island's primary targets for shareholder action. More details HERE.
Education Secretary Betsy DeVos withdrew student loan borrower protections put in place by the Obama administration, a move that steps away from accountability and opens the door for "rogue" servicers, according to critics.
One of the directives, which was later updated with another memo, called on Runcie to hold companies accountable for borrowers receiving accurate, consistent and timely information about their debt.
It also directed Runcie's team to base compensation on response time to answering calls, completing applications for income-driven repayment plans, errors made during communications, and the amount of time it takes to process payments. Another memo insisted FSA consider a company's past performance in divvying up the student loan portfolio.
That oursourcing refers to the fact that "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," the Post writes.
The CFPB sued that company in January "for systematically and illegally failing borrowers at every stage of repayment."
Yet the change ordered by DeVos "could make Navient a more likely contender for that contract, government officials said," Bloomberg adds.
And she's opened the door for rogue operators such as Navient, which overcharged service members and veterans millions of dollars, to win even more lucrative government contracts.
If Secretary DeVos were serious about curing America's trillion dollar student loan crisis, she would strengthen, not rescind, these protections," she continued.