The Trump incarnation of the Education Department’s early moves on student loans seem to be, very much, leaning towards protecting loan servicers and lending institutions over students. That’s an issue that’s just been reinforced with the department’s latest decision, which rescinds several key protections for student loans.
The rules in question were created by the Obama administration in response to unfolding scandals around student loan providers such as Navient, formerly part of Sallie Mae and under investigation for fraud and incompetence. They ordered the Federal Student Aid office to consider the past behavior of companies before contracting with them to service loans, and to put minimum expectations on those servicers, like being available to answer questions. The Education Department, for unclear reasons, has now withdrawn those guidelines, calling them “unclear” and complaining that various aspects have been forced to shift.
It’s not clear what rescinding these guidelines is supposed to achieve, exactly. No new guidelines seem forthcoming, and student loans are an increasingly pressing issue both economically and socially. However, one thing that is clear is that DeVos may soon be facing difficult questions over this decision. Her federal ethics review has revealed that she’s an investor in Performant, a company that collects on student debt that’s directly (and negatively) affected by these guidelines. There has yet to be any report from DeVos about potential conflicts of interest in her decision.