Betsy DeVos: College students and Higher Education, column by Nicolas Cordero

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Millions of college students will likely be affected by budget cuts and proposed policies from the current Education Secretary Betsy DeVos.

On April 12, the Trump administration withdrew a guidance that protected borrowers of student loans and established customer service guarantees. The Obama-era guidance was issued by former Education Secretary John B. King Jr. and former Under Secretary Ted Mitchell.  The direction made the Office of Federal Student Aid consider past behavior of companies when awarding contracts and to include consumer protections in those contracts.

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The Department of Education (ED) also withdrew from a process that incorporated a competition for selecting a variety of new companies to service all federal student loans. The performance based competition between nine companies was supposed to create better service for students, and reduce defaults and delinquency rates. Although the performance based competition did have its challenges, the system was designed to increase quality of service.  These new changes are worrisome for students who borrow or plan to borrow funds for college.

The Department of Education announced that only one company will serve all 32 million borrowers who have a student loan from the federal government. One company will manage a $1 billion dollar monopoly. Also, the ED eliminated requirements for the servicer that created proactive assistance for high risk students, such as more tools, options and calls to keep the borrowers informed.

Families and students feel that this is unfair for borrowers and that it creates a dangerous environment for them.

“I believe it creates a system where one company is too big to fail. We have seen it in the past. Businesses too big to fail were saved by taxpayer money because of lack of accountability. The fact that it is happening with education is atrocious,” said RMC senior Annastacia Anderson.

President Trump’s budget proposed cutting $143 billion in numerous benefits to millions of student loan borrowers. The budget proposes to cut subsidized Stafford Loans for new borrowers and plans on eliminating Public Service Loan Forgiveness.

“The proposed cuts in the budget affects all students, but specifically impact people of low income and folks that planned to do public work,” said Anderson.

During her confirmation, DeVos emphasized K-12 education and concepts like school choice. However, the largest portion of the department’s work is in higher education.  The ED currently manages almost $2 trillion in loans and grants. That is the largest student aid portfolio in its history. Many changes in student loans procedures have taken place and more are expected in the future.

Apart from the student loan changes, the budget seeks to cut billions from grant programs. A $3.9 billion reduction to the rainy fund of the nation’s largest grant for college is suggested. Furthermore, the budget proposes to eliminate the Federal Supplemental Education Opportunity Grant, which each year provides $732 million to over 1.5 million students in need.

The budget showed $279 million in cuts to college access programs and institutional support programs. Also, the budget seeks to reduce funds for on campus childcare by $15 million.

The Obama administration implemented a regulation that attempted to protect students from unfair pricing and excessive fee charges. In 2015, the Obama administration created a regulation that prevented debt collectors from charging high interest rates on overdue student loans. As long as the borrower entered the government’s loan-rehabilitation program within 60 days of defaulting, collecting agencies were forbidden from charging up to 16 percent interest. DeVos has overturned this regulation. Instead, DeVos supported a regulation that restores the collection of outrageous fees from lending companies. Collection agencies are now allowed to charge 16 percent more on loan balances.

“By the decisions I’ve seen take place it seems that the department is more concerned with the interests of the private sector rather than the wellbeing of students,” said Anderson

One benefit of the proposed budget is that it saves the ED $443 million in unnecessary subsidies; however, the savings are nothing compared to the billions in cuts in numerous programs that are designed to help students succeed.  

The changes in policies may not only affect the pocket of families, but also impact the safety of LGBTQ students. The department plans to revoke Title IX, which is a federal law that prohibits discrimination based on sex for schools and programs under federal funding. Regardless of where students may choose to go to college, it is likely that they will be impacted by the changes in policies from the Department of Education.

“I know many people from high school that didn’t want to go to college because of fear of long-term debt. Policies that increase likelihood of default and debt for students decreases their incentive to obtain a higher education,” said Anderson.

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