As her reign of terror atop the Department of Education continues, Secretary Betsy DeVos is working tirelessly to make life harder for student debtors.
During former President Barack Obama’s last year in office, he instructed then-Secretary of Education John King to make student debt servicers like Navient abide by new regulations that required them to, in a nutshell, not be shitty to their customers. On Tuesday, DeVos quietly repealed those regulations.
As Bloomberg reported, the Obama regulations required that student debt servicing companies inform student debtors about ways they could reduce their debt burden or eliminate their debt in the most efficient way possible, like telling them about income-based repayment programs and other means of managing their debt loads. Before federal contracts were renewed with student debt servicers, Secretary King instructed that Federal Student Aid administrator James Runcie — who oversaw contracts that handled $1.1 trillion in federal loans — review those companies’ customer service practices.
“Improper or abusive customer service speaks to a disregard for student and debtor needs that does not meet the standards we have set,” Sec. King wrote at the time.
Navient (formerly Sallie Mae) is particularly notorious for its horrendous customer service and exploitative practices. A one-star review of Navient on Consumer Affairs from “Amber” in Spooner, Wisconsin told a horror story of a student loan consolidation plan that was mistakenly put in Navient’s name. Her situation wasn’t resolved until she went around Navient and spoke with FedLoan Servicing.
“[Navient] acted like a collection agency. I informed them that they were no longer the loan holder, and they acted liked they didn’t know what I was talking about, threatening to send me to collections. I managed to force them to push back my due date until I could talk to Fed Loan Servicing,” Amber wrote. “I spoke with FedLoans immediately after speaking with Navient, and was informed that, yes, those loans had been included in the consolidation, and Navient had ALREADY BEEN PAID!”
Amber’s story is just one of many — in 2015, the Consumer Financial Protection Bureau (CFPB) highlighted some of the worst practices by Navient and other federal student loan servicers, including trapping them in the wrong repayment plan and refusing to inform borrowers about plans that would allow them to have more disposable monthly income. The CFPB is currently suing Navient, representing borrowers who have been damaged by Navient’s business practices.
With DeVos’ decision, the Department of Education will be free to renew contracts with student loan servicing companies that railroad borrowers.
The only reason that Secretary DeVos gave for repealing the Obama administration’s guidance on how the federal government should approach contracts with shady companies was a vague concern for stewardship of taxpayer dollars.
“We must 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,” DeVos said.
Tom Cahill is a senior editor for the Resistance Report based in the Pacific Northwest. He specializes in coverage of political, economic, and environmental news. You can contact him via email at [email protected], or follow him on Facebook by clicking here.