Secretary of Education, Betsy DeVos, has withdrawn policy directives from the Obama Administration regarding the collection of student loans and protections for student loan companies.
In a last week’s press release, DeVos announced that former Secretary John King’s memorandum had been withdrawn because its ambiguity and lack of consistent objectives interfered with the goals of the department.
“The student loan servicing procurement affords us a significant opportunity to improve outcomes and experiences for federal student loan borrowers, as well as demonstrate sound fiscal stewardship of public dollars,” said Secretary DeVos. “ 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.”
According to a Bloomberg report, the government spends around $800 million each year, to collect around $1.1 trillion of student loan debt. The report estimates that approximately 8.7 million American students defaulted on their loans for a “rate of one default roughly every 29 seconds”. The challenges of students taking on too much debt are not new problems and were discussed at length during the 2016 Presidential Election. While on the campaign trail, the Trump administration discussed federal student loan forgiveness after 15 years promising what the Washington Post called, “the most liberal student loan repayment plan since the inception of federal financial aid programs.”