In a letter sent recently, Mrs. Betsy DeVos, Secretary of Education, withdrew several policy memos from the previous administration involving consumer protections for student loan borrowers. Student loan repayment is managed in part by for-profit loan servicers. In her letter, DeVos cited the need to limit the cost to taxpayers of loan servicing. The Obama-era guidance had instead emphasized protection for borrowers.
This may be good news for Navient, the largest student loan servicer. The Federal Consumer Financial Protection Bureau recently sued Navient, alleging that it “illegally cheated borrowers” out of their rights and their money — as much as $4 billion — through patterns of deception and misapplying payments.
Navient has denied wrongdoing, calling the suit “unsubstantiated, unjustified and politically driven.” So why do they think that could possibly be, and where did they get that idea? Why, from students who have been exploited, misled and cheated perhaps – or who just feel they have been cheated.
Navient, formerly called Sallie Mae, is the most complained about financial company in America, according the Consumer Financial Protection Bureau. In one year alone, reports issued about Navient rose a whopping 813% year over year, with complaints about misleading borrowers and bungling students’ payments, according to BuzzFeed.
Navient had more complaints than any other financial service including credit reporting companies — like Equifax, Experian, and Transunion — along with major banks like Capital One, Bank of America, and JPMorgan Chase. A student loan services might be expected to encourage students to learn, to teach them how to handle money, not scare them off higher ecucation. Navient oversees about $300 billion in student loans owed by 12 million borrowers. It seems that there are a lot of unhappy students out there, and De Vos wants to reduce their safeguards and protections even further, reducing lending costs and in reasing profit – from students! May heaven help us!
Student loans shouldn’t be operated for profit. Period. But there is always some well- heeled gent with good political connections who can profit from an idea in return for election donations. Sad.