Betsy DeVos axes Obama rule protecting student loan holders
"For you to understand what it's like for students and families who are struggling to pay for college, have you ever taken out a student loan from the federal government?"
"No, I have not."
-Elizabeth Warren questioning Betsy DeVos, Senate Confirmation Hearing, 1/18/2017
Betsy DeVos has reversed an Obama-era guidance forbidding debt collectors from charging student loan holders high fees on past-due debt payments. The Obama administration had previously issued guidance instructing debt collection agencies not to apply charges - as high as 16% on the loan's principal and accrued interest in some cases - against borrowers who had defaulted on their loans. This leaves borrowers who find themselves struggling to repay their loans open to staggering charges from their collection agencies.
The Consumer Federation of America recently found the number of people defaulting on their student debt is rising; critics say the revocation of this Obama-era guidance leaves low-income borrowers vulnerable to crippling student debt payments when they are suffering from financial hardship.
Student loan debt is the only kind of debt on which bankruptcy cannot be declared. Consumer protections in the form of bankruptcy was a priority of the Founding Fathers. The POTUS has declared bankruptcy four times and also bemoaned the Federal government for profiting off of student loans.
Betsy DeVos was born exorbitantly wealthy and married into an even wealthier family. Neither she nor her children have ever taken out a loan. She has no relevant experience managing loan programs in her personal or professional life. Furthermore, she has connections to a debt collection agency, raising concerns she overturned the policy for private gain.
Crushing student loan debt has crippled Millennials. Rather than purchasing housing, current graduates typically find themselves in a paycheck-to-paycheck lifestyle. Lower wages and rising debt threaten the future of millions of graduates. Many veterans find themselves defaulting on loans from low-quality diploma mills (for-profit private "universities") such as Corinthian college.
It appears as if a born-rich billionaire has decided to target vulnerable graduates embarking upon their professional career. Student loans have eclipsed credit cards as the nation's premier debt crisis - to the tune of approximately $1.2 trillion.