Tags: betsy devos | student loans | protections | borrowers

Betsy DeVos Student Loans Guidance Rolls Back Obama-Era Protections

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Education Secretary Betsy DeVos listens during a meeting between President Donald Trump and business leaders in the State Department Library of the Eisenhower Executive Office Building on the White House complex in Washington, Tuesday, April 11, 2017. (AP Photo/Evan Vucci)

By    |   Thursday, 13 Apr 2017 02:51 PM

Education Secretary Betsy DeVos rolled back student loan guidelines put in place by former President Barack Obama to protect borrowers.

On Tuesday, DeVos called for Obama-era memorandums to be revoked, "to negate any impediment, ambiguity or inconsistency" to providing "high quality customer service to federal loan borrowers in a cost-efficient and effective way."

"We have a duty to do right by both borrowers and taxpayers," DeVos said in her April 11 memo.

Student loan contracts are managed by third-party companies – organizations that rely on the U.S. government for contracts, NBC News noted.

Prior to the Obama era, companies that were good at collecting debts were usually the ones awarded the contracts, but once Obama was in office, those guidelines were changed to award contracts to companies that had a good history of helping borrowers.

"[The Obama memo] alerted servicers that how they deal with borrowers – the outcomes would be a factor in if they’re awarded a contract," said Attorney Adam Minsky, who has been committed over the years to helping people with student loans. "[The memo said,] ‘We’re going to consider that.’ And the idea there was to incentivize the servicers to work harder to help borrowers."

DeVos said withdrawing that plan aims to limit "the cost to taxpayers" and increases "customer service and accountability," NBC noted.

Student loan expert Heather Jarvis called the change "ridiculous" and said it make things harder for borrowers, as the student loan collectors are now being put above the borrowers, NBC News reported.

"Borrowers don’t get to decide who their servicers are and [the servicers] can make your life miserable if they’re not doing a good job, and they’re not," Jarvis told the network. "For years, the government was content to award contracts based on the collection success of servicers. But Obama became aware of the problems students and families face and decided we want you to do better."

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Education Secretary Betsy DeVos rolled back student loan guidelines put in place by former President Barack Obama to protect borrowers.
betsy devos, student loans, protections, borrowers
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2017-51-13
Thursday, 13 Apr 2017 02:51 PM
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