News briefs

Betsy DeVos revokes Obama’s student loan protections

U.S. Education Secretary Betsy DeVos has withdrawn a series of Obama-era policies designed to strengthen protections for student loan borrowers. She rescinded a pair of memorandum that discouraged debt-collection agencies from predatory behavior.

The now-defunct guidelines sought to award contracts servicing student-loan debt to collectors with a record of helping borrowers, instead of those companies best at collecting debts. The guidance also called for the creation of financial incentives for targeted outreach to people at great risk of defaulting on their loans to help them manage their debt.

The Obama administration’s policies were a response to numerous complaints to the Education Department and the Consumer Financial Protection Bureau over bad behavior from student debt-collection agencies.

“DeVos’ action today moves us away from true accountability and creates dangers for the very student-loan borrowers the department is responsible for protecting,” said Alexis Goldstein, a senior policy analyst at Americans for Financial Reform.

The Department of Education also repealed the Obama administration’s ban on certain fees that debt collectors charge borrowers who default on student loans backed by federal guarantee. Moreover, DeVos moved to rehire four debt-collection agencies the previous administration had fired over charges that they misled struggling borrowers about their options.

The Washington Post, April 11
NBC, April 12

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