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Betsy DeVos Is Wasting No Time Screwing Over Students Who Borrow Money for College
Complete with typos. The article defied cutting and pasting. I had to go into "view source" to get the text.
April 18 2017 4:58 pm
Betsy DeVos Is Wasting No Time Screwing Over Students Who Borrow Money for College
by Jordan Weissmann
Secretary of Education Betsy DeVos has been sending some chilling signals lately about how she plans to deal with America's $1.3 trillion student debt burden. On at least two separate ocassions now, her department has scrapped Obama-era reforms that were designed to protect borrowers from being gouged or misled by the companies responsible for collecting their loans. All told, DeVos seems less interested in protecting former students than in protecting the predators that have fleeced them for profit.
The trouble signs started flashing in March, when the Department of Education gave a group of student debt collectors permission to once again start slapping heavy fees on delinquent borrowers who were trying to catch up on loan payments. The practice had effectively been banned during the Obama administration. In a pleasantly unexpected turn, all of the organizations affected by the move announced that they would not bring back the penalties. But the incident was still disturbing, both because it demonstrated DeVos' willingness to side with businesses over borrowers and because it may have involved a astounding conflict of interest.
The controversy centered on a slightly obscure group of nonprofits known as guarantee agencies, which are responsible for collecting and rehabbing defaulted loans that were made as part of the government's old, bank-based student lending scheme (though the program was discontinued in 2010, there are still hundreds of billions of dollars of loans still outstanding from it). Up until 2015, when the Obama administration determined the practice was illegal, these organizations were notorious for charging high fees to borrowers who had defaulted on their debts but promised to pay up on them within 60 days. These penalties -- equal to 16 percent of a borrower's total loan balance -- could be punishing. In one notable case, a Kansas woman sued the country's largest guarantee agency, United Student Funds, after it charged her $4,500 in fees just to bring her loan current. But following the Obama administration's clampdown, United Student Funds filed its own lawsuit claiming the penalty fees should have been permitted under the law. That case lingered on through this year.
Now here's where the conflict of interest comes into play. Until January, United Student Funds was run by a former Bush administration official named Bill Hansen. His son, a former for-profit college lobbyist named Taylor Hansen, just happened to be an adviser to Betsy DeVos at the Department of Education. As Bloomberg's Shahien Nasiripour reported, Hansen the younger resigned from the agency the day after DeVos issued her decision blessing the guaranty agency fees. This did not go unnoticed: Sen. Elizabeth Warren of Massachusetts, among others, called out the bizarre family connection. A Department of Education spokesman told Bloomberg that Hansen had recused himself from any issues involving United Student Funds' lawsuit, but it wasn't clear whether he was also kept out of general conversations involving guarantee agency fees. There was, at the very least, plenty of smoke.
Betsy DeVos Is Wasting No Time Screwing Over Students Who Borrow Money for College
by Jordan Weissmann
Secretary of Education Betsy DeVos has been sending some chilling signals lately about how she plans to deal with America's $1.3 trillion student debt burden. On at least two separate ocassions now, her department has scrapped Obama-era reforms that were designed to protect borrowers from being gouged or misled by the companies responsible for collecting their loans. All told, DeVos seems less interested in protecting former students than in protecting the predators that have fleeced them for profit.
The trouble signs started flashing in March, when the Department of Education gave a group of student debt collectors permission to once again start slapping heavy fees on delinquent borrowers who were trying to catch up on loan payments. The practice had effectively been banned during the Obama administration. In a pleasantly unexpected turn, all of the organizations affected by the move announced that they would not bring back the penalties. But the incident was still disturbing, both because it demonstrated DeVos' willingness to side with businesses over borrowers and because it may have involved a astounding conflict of interest.
The controversy centered on a slightly obscure group of nonprofits known as guarantee agencies, which are responsible for collecting and rehabbing defaulted loans that were made as part of the government's old, bank-based student lending scheme (though the program was discontinued in 2010, there are still hundreds of billions of dollars of loans still outstanding from it). Up until 2015, when the Obama administration determined the practice was illegal, these organizations were notorious for charging high fees to borrowers who had defaulted on their debts but promised to pay up on them within 60 days. These penalties -- equal to 16 percent of a borrower's total loan balance -- could be punishing. In one notable case, a Kansas woman sued the country's largest guarantee agency, United Student Funds, after it charged her $4,500 in fees just to bring her loan current. But following the Obama administration's clampdown, United Student Funds filed its own lawsuit claiming the penalty fees should have been permitted under the law. That case lingered on through this year.
Now here's where the conflict of interest comes into play. Until January, United Student Funds was run by a former Bush administration official named Bill Hansen. His son, a former for-profit college lobbyist named Taylor Hansen, just happened to be an adviser to Betsy DeVos at the Department of Education. As Bloomberg's Shahien Nasiripour reported, Hansen the younger resigned from the agency the day after DeVos issued her decision blessing the guaranty agency fees. This did not go unnoticed: Sen. Elizabeth Warren of Massachusetts, among others, called out the bizarre family connection. A Department of Education spokesman told Bloomberg that Hansen had recused himself from any issues involving United Student Funds' lawsuit, but it wasn't clear whether he was also kept out of general conversations involving guarantee agency fees. There was, at the very least, plenty of smoke.
