Education Secretary Betsy DeVos Rescinds Obama Guidance That Prioritized Student Loan Lenders Focusing On Helping Students Rather Than Those Best At Collecting Debts

 In Education, Government Regulations   Last Updated: August 2, 2017

Secretary Of Education Betsy DeVos issued a memorandum that formally withdraws two Obama administration memorandums (and one addendum to one of those memorandums) in an effort to change the student loan borrowing process with respect to how loans are serviced.  The Obama memos aimed to guide loan servicers towards helping students rather than making money:

Student loan contracts aren’t serviced in-house by the Federal Student Aid Office. Instead, they are managed by third-party companies, which are awarded contracts by the government. Before the Obama memos, those contracts went to companies that were best at collecting debts.

Rather than rewarding companies that cashed in on debts, the now-rescinded Obama guidance incentivized a good track record and sought to award contracts to companies with a history of helping borrowers.

DeVos notes in her memorandum “We must create a student loan servicing environment that provides the highest quality customer service and increases accountability and transparency for all borrowers, while also limiting the cost to taxpayers”.   DeVos also said “the previous administration’s approach was inconsistent and full of shortcomings”.  It is currently unclear how, what, and when significant changes will be made.




Nasiripour, Shahien. “DeVos Undoes Obama Student Loan Protections.” Bloomberg, 11 Apr. 2017. Web. 15 Apr. 2017.
Rosenblatt, Kalhan. “Will Betsy DeVos’ Rollback of Two Obama Memos Impact You? NBCUniversal News Group, 12 Apr. 2017. Web. 15 Apr. 2017.
DeVos, Betsy. “Student Loan Servicer Recompete.” (n.d.): n. pag. Department of Education, 11 Apr. 2017. Web. 15 Apr. 2017.

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