Student Loans: What DeVos Might Do
After one of the more contentious Senate confirmation hearings in recent memory -- and a first-ever vice presidential tie-breaking vote, Betsy DeVos has been confirmed as the new U.S. secretary of education. While much has been written about this controversial appointment in recent weeks, there's been little discussion as to her possible plans regarding higher education and -- most important for many of our readers -- student loan debt.
To try and get a glimpse of what we could expect in the coming months and years, the Student Loan Ranger turned, in part, to DeVos' written answers to the almost 1,400 questions she received from senators leading up to her confirmation hearing.
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Several senators -- Sen. Elizabeth Warren , D-M ass. , and Sen. Patty Murray , D-W ash., in particular -- started their series of higher education-related questions by asking about DeVos' intent on preserving the Direct Loan program, as opposed to reinstating some type of private lender-funded federal student loan program, which existed up until 2010.
They also asked her about reducing student loan delinquencies, default and interest rates. DeVos answered these questions generally by stating that, if confirmed, she looks forward to discussing these issues as part of the reauthorization of the Higher Education Act.
Our read on this noncommittal answer is that because she admittedly has no experience in the student loan policy arena, she is unwilling to commit to a position on these issues before vetting them fully. This is a preferable response, because it indicates that she knows what she doesn't know and appears willing to consider all sides of an issue when the time comes.
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This answer is also encouraging in light of some recent chatter we've heard out of the District of Columbia that suggests there may be an appetite in the U.S. Senate Committee on Health, Education, Labor and Pensions to reduce or eliminate the p arent Plus loan program and count on the private loan programs to meet that funding gap.
We have significant concerns about this -- private loan programs can be notoriously difficult to manage if a borrower is having financial difficulties. Also, since the credit requirement for private loans is much more stringent than for federal loan programs, we fear such a move could potentially exclude lower-income households from their college of choice.
Warren also asked several questions related to fraudulent for-profit institutions and whether DeVos would support existing laws aimed at ferreting out such schools and protecting the students affected by them. DeVos' answer was particularly telling when she responded in part by saying, "Bad actors clearly exist -- in both public and nonpublic institutions. When we find them, we should act decisively to protect students and enforce existing laws."
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Many of the new rules issued during the last administration, such as gainful employment and borrower defense to repayment, were seen as unfairly targeting for-profit schools. This answer could indicate her specific support of the for-profit industry and could be seen as an intent to attempt to roll back some of these protections.
In fact, when asked later about the gainful employment rules specifically, she responded in part by saying, "The Department has had significant implementation issues with this regulation, including questions as to the accuracy of the data originally reported, the design of a system that would allow schools to challenge incorrect data, and the ability to provide the necessary technical assistance required. The last thing any of us want is to unnecessarily close down important programs -- putting students on the street with limited or no other options."
Later, when asked about the borrower defense to repayment rules, she answered, "However, I'm agnostic about the type of provider of educational options to our students. Let's find the best and not discriminate simply because of their tax status."
While the Ranger agrees that bad actors are in all sectors, recent history has shown us that some of the more egregious fraudulent practices that have cost U.S. taxpayers the most dollars have been perpetrated by a few, large, for-profit institutions. We have significant concerns that these answers show a propensity to repeal these protections, rather than improve their effectiveness.
We don't have enough room in this post to discuss all the topics covered in these questions. In addition to fraud, for-profit schools and preserving federal loans programs, the themes of this discussion included transparency, accountability, data collection and availability to consumers as well as protection of veterans' higher education benefits.
DeVos seems particularly supportive of making more data available to families regarding the schools they are considering. This is good news -- we have always been in favor of giving families the tools they need to make the best higher education and debt decisions. We just hope that such data is not received in exchange for the rollback of the significant protections borrowers have gained against fraudulent schools in recent years.
Betsy Mayotte, director of consumer outreach and compliance for American Student Assistance, regularly advises consumers on planning and paying for college. Mayotte, who received a B.S. in business communications from Bentley College, responds to public inquiries via the advice resource "Just Ask" and is frequently quoted in traditional and social media on the topics of student loans and financial aid.
