Secretary of Education removes consumer protections from student loans

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Photo Credit: Courtesy of Michael Vadon | Daily Texan Staff

U.S. Secretary of Education Betsy DeVos retracted policy memos two weeks ago that protected students taking out loans, a decision which could impact students across the country.

In a letter delivered to James Runcie, Federal Student Aid chief operating officer, DeVos withdrew three memos issued during the Obama administration. One of the memos held companies accountable for providing borrowers with consistent, precise and timely information about their debt. 

Biology freshman Rifa Marediya said she receives email reminders regarding a loan her family took out to pay for tuition. Considering her hectic student life, Marediya said the emails are a convenience she enjoys. 

“I don’t like staying on the phone and calling someone and waiting for them to tell me something that I could’ve figured out if I had the email,” Marediya said. “(Students) can go on (their) emails and just click on the links in the email and figure out how much to pay. It saves time and it’s faster.” 

Kendall Slagle, content strategist of the Executive Vice President and Provost, said the most recent data from the fall 2015 semester shows 13,996 UT undergraduate students were awarded federal student loans, totaling more than $99 million borrowed.  

“We now find ourselves in a situation where we must promptly address not only these shortcomings but also any other issues that may impede our ability to ensure borrowers do not experience deficiencies in service,” DeVos said in the letter.

The need to hold companies accountable comes from complaints the Education Department and the Consumer Financial Protection Bureau received under the Obama administration, according to The Washington Post. The Bureau reported loan-servicing companies are losing paperwork, charging unexpected fees or providing inconsistent information. 

Under the Obama administration, a new process was created to make a single place available for students to repay their loans instead of going through different servicers for multiple loans. In response, loan-servicing companies complained the changes would be expensive and a misuse of time. 

In her letter, DeVos stopped this process and did not offer an alternative.

“We must create a student loan servicing environment that provides the highest quality customer service and increases accountability and transparency for all borrowers, while also limiting the cost to taxpayers,” DeVos said in the letter. 

Although students rely on the emailing service to help them repay their student loans, students can still access their repayment information online, said Trina Manor, associate director for the Office of Financial Aid.  

“Even if you’re not emailed you can log into an account to see where you are and see who you need to contact,” Manor said. “They’ve got all of the contact information there and where your balance stands.” 

Manor said DeVos’ removal of the emailing service doesn’t necessarily mean loan-servicing companies will follow through with it. 

“Just because you’ve taken away the mandate to do it, some servicers just might say, ‘This is a good customer service thing for us to do, so we are going to continue to do it,’ so that’s a possibility there,” Manor said.