Despite the recovery, student loan debt continues to be a “drag” on the economy. As numerous economists have explained, Millennials have not been buying homes (and the furniture and appliances to fill them)at the same rates as preceding generations due to the significant student debt so many of them carry.
Repayment is burdensome enough when the student assuming the debt used it at a reputable institution of higher education, and graduated with a credential that led to employment. But that hasn’t always been the case. For-profit “colleges” making extravagant claims on which they are (knowingly) unable to deliver have ripped off thousands of low-income students–and ultimately, all of us, since those students subsequently default on their government loans.
And then there are the “private” loan servicers, who have gouged other students, and who are protected against loss by government guarantees.
The Obama administration had taken several steps to punish institutions and lenders who engaged in these practices, and to relieve the students who had been defrauded of all or part of their repayment obligations. But of course, the sympathies of the Trump administration and Betsy DeVos lie entirely with the perpetrators, not the victims.
The nation’s consumer watchdog agency is accusing the Education Department of impeding a lawsuit that could potentially bring financial relief to millions of student loan borrowers.
The Consumer Financial Protection Bureau is suing Navient Solutions, alleging one of the nation’s largest student loan servicers violated consumer protection laws and in some cases caused students to pay back too much on their student loans. But in court filings, the CFPB says the Education Department is refusing to authorize Navient to turn over documents. Without that authorization the federal government, as well as several state attorneys general suing Navient, could find it difficult to show what type of damage the company’s alleged misbehavior caused to borrowers….
Under the Obama Administration, the Education Department and the CFPB agreed to share records and resources in cases of potential violations of student borrowing or consumer protection laws. But after Trump-appointee Betsy DeVos took over, the Education Department rescinded that agreement, calling the CFPB “overreaching and unaccountable” and saying the bureau had no authority to oversee federal student loan servicers.
DeVos has previously acted to protect non-performing for-profit colleges, as Time Magazine reported in May.
Career Education Corporation is one of the companies no longer being investigated by the U.S. Education Department after members of an enforcement office tasked with investigating abuses by for-profit colleges were instructed to focus on other issues, the New York Times reported this week, citing current and former employees. Meanwhile, former executives and consultants from those for-profit institutions have been hired as top advisers to the Education Department under DeVos.
This isn’t a matter of being legitimately “pro-business.” A pro-business administration would help the entire business community by taking steps to reduce the excessive levels of student debt that are burdening economic activity generally, including weeding out the bad actors.
This is a “pro-crony” administration. And if the students suffer, well–they aren’t the political donors whose interests this administration serves.