Betsy DeVos has put out the order to yet again rollback a student loan borrower protection put in place by the former president.
Education Secretary Betsy DeVos is back at it again. President Obama had put in place protections for borrowers since the student loan system was forcing so many of them into default. The protection Obama put in place would mandate that the Federal Student Aid Office change their focus. Instead of spending the majority of their time on debt collection, they would be forced to help borrowers find ways to manage their debt and repayment plans.
Acting in the interest of the borrower has been put into question lately. In order to cut costs, DeVos has put out the order to yet again rollback a student loan borrower protection put in place by the former president. As with the last rollback on protection, there is currently no replacement plan.
Our mission in the student loan servicing procurement process is to provide high quality customer service to federal loan borrowers in a cost-efficient and effective manner. I write today to reiterate the importance of the task ahead and reaffirm the Department’s commitment to achieving its mission.
Unfortunately, this process has been subjected to a myriad of moving deadlines, changing requirements and a lack of consistent objectives. We now find ourselves in a situation where we must promptly address not only these shortcomings but also any other issues that may impede our ability to ensure borrowers do not experience deficiencies in service.
— The press release issuing the rollback
With a lawsuit against Navient still underway, this is a big blow to borrowers as it will back up claims that the company has recently made.
“First, Navient’s relationship with borrowers is that of an arm’s-length loan servicer, not a fiduciary counselor. A servicer’s role is to collect payments owed by borrowers. In that role, the servicer acts in the lender’s interest (here that lender is often the federal government itself), and there is no expectation that the servicer Case 3:17-cv-00101-RDM Document 29 Filed 03/24/17 Page 28 of 43 21 will “act in the interest of the consumer.””
— Navient’s statement on the lawsuit
Unfortunately, this move will likely result in more student loan defaults across America. A total of 4.2 million borrowers were in default in 2016, which is up 17% from 3.6 million the year before. Some borrowers ended up clearing their default status, however, many stayed. Student loan default can lead to borrowers having their wages, Social Security checks, and tax refunds garnished. With these protections on default leaving the student loan space, it may promote lenders becoming more predatory upon their borrowers. After all, Navient and potentially other servicers say “there is no expectation that the servicer … act in the interest of the consumer.”
Options are available to help
Most people do not realize that there are programs designed to help those who may be struggling with their student loan payments. Thousands of borrowers have trusted Ameritech Financial to be their advocate. Click here to find out what options are available. Our services could help you get back on track.Get Started Learn More