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DeVos Just Put Interests of ‘Predatory Profiteers’ Over Student Loan Borrowers

(COMMON DREAMS) Andrea Germanos,April 13, 2017 — Education Secretary Betsy DeVos on Tuesday 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.

DeVos outlined the change in a memo (pdf) sent to James Runcie, the chief operating officer of Federal Student Aid (FSA), in which she laments “a lack of consistent objectives” and other “shortcomings” in the current loan processing system, which as one observer sees it, was, in fact clear, and “was built to make repaying loans easier.”

The Washington Post explains the education secretary’s action:

DeVos has withdrawn three memos issued by former education secretary John King and his under secretary Ted Mitchell. 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. The 56-page memo called for the creation of financial incentives for targeted outreach to people at great risk of defaulting on their loans, a baseline level of service for all borrowers and a contract flexible enough to penalize servicers for poor service, among other things.

The Obama administration requested routine audits of records, systems, complaints and a compliance-review process. 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.

“The guidelines,” Cory Doctorow wrote at BoingBoing, “were enacted after the Government Accountability Office found that the Department of Education’s outsourced debt-collectors were cheating borrowers and engaging in other corrupt, negligent, and criminal practices.” 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.

Source: DeVos Just Put Interests of ‘Predatory Profiteers’ Over Student Loan Borrowers | Common Dreams