Betsy DeVos Plans To Make Paying Back Your Student Loans Even Worse

Education Secretary Betsy DeVos' new plan is a poorly thought out attempt to simplify student loans and runs the risk of making borrowers even more vulnerable to servicing companies.

The fact that President Donald Trump nominated her was the first sign that Education Secretary Betsy DeVos was not good news for America. Since then, a winding road of bigotrybig money, bears, an ill-conceived voucher program, and a disturbing misreading of history has proven that DeVos is downright dangerous in her ignorance.

DeVos recently decided to simplify the federal student loan repayment system, which can be frustratingly complex at times. While the overarching concept is something we can all get on board with, her plan is poorly thought out and risky.

Her grand idea is to do away with the contracts for the nine companies currently responsible for handling federal student loan debt and instead place an estimated 32 million federal student loans in the control of a single company. In the words of Jack Moore for GQ, DeVos has elected to "basically allow a government-sanctioned monopoly to form around student debt collection."

While navigating nine loan servicing companies can be exasperating, it has capitalist benefits that are oddly non-existent in DeVos' plan: choice, which encourages competition. Having multiple companies trying to outdo each other in loan servicing options in order to attract customers ensures that no company has a monopoly on the process of student debt repayment.

The Washington Post notes that one of the most troubling things about this decision is that the single loan servicing system has already been tried, and critics recall how it led to serious failures in loan consolidations and customer service. ACS Education Services was once the sole manager of federal student loans, and Robert Shireman, a former deputy undersecretary in the President Barack Obama administration, remembers this was a serious problem.

“We felt we had little leverage because the whole system was operated by them, and they knew it would be such a huge endeavor to change that, so they didn’t have to be responsive,” Shireman told The Washington Post. “There was a move to add at least a couple servicers so you’d have competition and the department wouldn’t be stuck in that situation again.”

So, while moving away from a single-service system made things more complicated in some ways, it also did a lot to protect student loan borrowers. Protecting students though is not the DeVos way, though she makes much of bears getting into schools. She has already removed other protections and this new decision could very likely only make paying off your student loans even more of a seemingly endless nightmare.

College isn't forever, but if DeVos' plans continue to look this bad student debt just might be.

Banner/thumbnail credit: Reuters 

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