The Trump/DeVos administration has been busy during the past 18 months, rolling back significant protections for student loan borrowers and their families. Just in the past couple of weeks, there have been two new developments that curtail regulation of predatory schools, lenders, servicers, and debt collectors.
First, the Consumer Financial Protection Bureau (CFPB), now under the leadership of Trump appointee Mick Mulvaney, effectively eliminated its student loan division by rolling it into a different department that has no investigatory or enforcement power. Previously, the CFPB’s student loan division had issued comprehensive, data-driven reports on the atrocious state of federal student loan servicing. It had also brought numerous enforcement actions and filed several lawsuits against predatory companies, including Navient, returning upwards of $750 million to student loan borrowers and other consumers harmed by unfair or harmful business practices. It looks like we can no longer count on the CFPB to do this work.
Then, the U.S. Dept. of Education under Secretary Betsy DeVos largely eliminated a special division tasked with investigating fraud and other illegal practices by for-profit colleges. During the Obama administration, this division had expanded to include over a dozen professionals, including attorneys and investigators, as they stepped up the regulation of predatory institutions, which often rely on easy access to federal student aid for revenue while actively defrauding their students. DeVos has placed several people from the for-profit college industry into top positions at the Dept. of Education, and together they have now effectively shut down the investigations of these schools.
But these are just the latest rollbacks to student loan borrower protections during the past year and a half. Here are some others:
- The Trump administration and Congress have proposed eliminating Public Service Loan Forgiveness (PSLF), although current borrowers would effectively be grandfathered in under the current proposals.
- Changes have been proposed to income-driven repayment plans, including eliminating loan forgiveness and certain poverty exemptions, making repayment longer and more expensive for the poorest student loan borrowers. As with PSLF, current borrowers would effectively be grandfathered in to current programs under the existing proposals.
- The Dept. of Education has been dragging its feet in processing borrower “Defense to Repayment” applications related to school fraud, and is actively trying to roll back the program entirely. The Defense to Repayment program allows borrowers to request loan forgiveness if their school engages in fraud or other serious misconduct that renders their degree worthless. New regulations dramatically scaling back the program and limiting relief are currently under consideration.
- Betsy DeVos rescinded Dept. of Education policy guidance and key Obama-era memos providing incentives for student loan servicers to perform better by tying customer satisfaction to contract renewals.
- The Dept. of Education is actively rewriting – and effectively rescinding – rules requiring that schools maintain sufficient employment prospects for their graduates in order to continue to have access to federal student aid programs.
Together, these systematic rollbacks of student loan borrower protections send a clear signal to schools, lenders, and servicers that the Dept. of Education will not be interfering in their business practices, regardless of the harm they cause to student loan borrowers and taxpayers. In fact, the Dept. of Education is now actively intervening on behalf of loan servicing companies as states step in to protect their residents.
This is certainly discouraging, but there is a lot you can do to try to preserve student loan borrower protections. Check out my guide, and get involved.