Federal Student Aid, the agency within the Education Department that oversees student loans, outsources loan servicing to private companies.
The Consumer Financial Protection Bureau, in particular, appointed a student loan “czar,” who has collected
thousands of complaints from borrowers and has published an annual report on student loans.
The Consumer Financial Protection Bureau has documented thousands of cases in which loan companies
have misdirected payments, lost paperwork and charged the wrong interest rate on loans.
It is puzzling that Ms. DeVos has consistently said
that government should be held accountable for the quality of the services it delivers to students, yet the Education Department has in short order made loan companies less accountable to both the government and to borrowers.
First, the Education Department has weakened accountability for the companies that administer student loans.
The Obama administration had limited the ability of loan companies to impose punitive fees on borrowers who were in default.
Companies like Navient are the face of the student loan system, and often the source of enormous frustration for borrowers.
But with a series of regulatory changes, the Trump administration is taking us in the wrong
direction, making student loans riskier, more expensive and more burdensome for borrowers.
Dismantling the regulation of loan companies isn’t likely to unleash an innovative, private market
that will improve services for borrowers, who have been assigned to a loan company and can’t shift to a better one.