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Department of Education Living in Upside Down World – Debtors Come Last

By on September 10, 2018

I don’t know how much more bizarre and anti-consumer the Department of Education under Betsy DeVos can get.

It has been horrible to watch Education end programs, drag their feet dealing with students who are the victims of fraud by schools, not holding student loan servicers accountable for good advice, and the list goes on.

Yet the Department of Education is now bragging about how much easier they’ve made it for students to get loans with their new smartphone app. Yes, it is easier to get loans but they come with less options when people run into trouble. That’s upside down in my book.

The Consumer Financial Protection Bureau (CFPB) was doing good work in finding student loan issues but the guy in charge of the Student Loan Ombudsman department at the CFPB, quit in disgust. He could not take the anti-consumer approach anymore.

The Department of Education has even stopped sharing data with the CFPB to assist in their efforts of cleaning up student loan servicing problems.

So now, Secretary DeVos is now using government tax dollars to fight states trying to put in place their own regulations to protect consumers from student loan problems.

It is reported, “Trump administration lawyers filed a “statement of interest” last month supporting a lawsuit from the Student Loan Servicing Alliance, an industry trade group, against the District of Columbia for creating a student loan ombudsman office. Under a new city law, the companies would be required to apply for licenses and could lose their right to operate if officials determine that they have engaged in fraudulent or irresponsible practices.”

A spokesperson for DeVos said the government should control the regulation of federal student loans but the issue is, they are not putting consumers first.

Your tax dollars are being used to harm consumers and shield student loan servicing companies who contract with the Department of Education. These are the same companies who have said they don’t have a duty to provide good advice to student debtors.

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The old CFPB was fighting back about that. The new CFPB under Trump/DeVos is scaling back their capabilities and efforts to hold student loan servicing companies accountable.

The Department of Education spokesperson is reported to have said “A piecemeal, state-by-state approach to regulating federal assets causes confusion for borrowers and makes administration of the loan program more complicated and costly.” But isn’t the issue of state-rights something the Republican’s have fought for. Here we have the Trump administration arguing for more federal power and telling the states to go pound sand.

Are people really okay with this rapid elimination of protections from student loan abuses? Does anyone give a damn or am I just wasting life energy being outraged about these issues?

Seth Frotman, the now former CFPB Student Loan Ombudsman said, “As state law enforcement officials and legislators across the political spectrum stand up for student loan borrowers who have been ripped off at every turn, Donald Trump and Betsy Devos have instead chosen to protect companies engaged in rampant illegal practices.”

Voters need to give a damn.

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About Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

2 Comments

  1. Lee Dyroen

    September 11, 2018 at 6:48 pm

    Your many articles about student loan hell have caused me to make sure my grand kids NEVER fall into the hands of the loan sharks at the DOE and their supporting minions. It will cost me and my bride of 48 years a lot of nice vacations and luxo living. The first one just entered private college, and was blatantly directed to the “Student Aid” office. Not on my grandparent watch.

    • Steve Rhode

      September 12, 2018 at 8:41 am

      A great watch to keep.

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