By disregarding the needs of 40 million debt-laden student loan borrowers who collectively owe more than $1.2 trillion, it seems one of the US Department of Education’s top priorities is to respond to concerns of student loan servicers hired and paid with taxpayer dollars. Where is a Betsy DeVos plan to address these growing concerns?
In 2016, the Consumer Financial Protection Bureau (CFPB) received 12,300 student loan complaints. The vast majority – 67 percent – concerned either their lender or their servicer.
Another 30 percent focused on fees, billing, credit reporting, defaults and fraud.
Want more money
Despite minimal standards of accountability, on April 4, the National Council of Higher Education Resources (NCHER), which represents student loan servicers, wrote the chairs and ranking members of the House Appropriations Committee and its Education subcommittee.
In part, the letter said that, “the amount that is paid to servicers is not sufficient to cover the currently requested services or the expected services that borrowers need to begin paying their student loans.” In everyday language, that sounds a lot like, ‘You don’t pay me enough to do this job.’
Secretary DeVos subsequently rolled back important guidance on student loan servicing. The now-retracted guidance provided borrowers access to accurate information and consistent service; used regular audits of records and complaints in compliance reviews; and connected servicer compensation to measurable actions such as payment processing time and errors.
CFPB is the consumer’s federal cop-on-the-beat. That agency is also facing challenges as President Trump has publicly vowed a regulatory rollback in general and a haircut specifically for the CFPB.
As some have maintained in public policy debates, regulation has gotten in the way of private enterprise.
The American people shouldn’t be shortchanged for the sake of private entities looking for more lucrative contracts. That’s something the Education secretary needs to learn.
Charlene Crowell is the deputy communications director at the Center for Responsible Lending.