AFR Statement: Secretary DeVos moves ED toward less accountability and worse service for student loan borrowers

For immediate release

April 11, 2017

Contact: Alexis Goldstein,, 202-973-8005

Americans for Financial Reform strongly condemns the decision today by Secretary Betsy DeVos to rescind three memos that provided for increased consumer protection and servicer accountability. In the letter today, Secretary DeVos wrote that the Department must create a servicing environment that “provides the highest quality customer service and increases accountability and transparency for all borrowers.” But Secretary DeVos’s actions today do precisely the opposite, moving the Department toward less accountability and worse service for student loan borrowers.

The June 30 2016 memo rescinded today instructed Federal Student Aid (FSA) that they had to consider past performance awarding student loan servicing contracts, including whether servicers had “misled, ignored, or provided wrong information” to borrowers or if there was “improper or abusive customer service.” Rescinding this memo opens the door to servicers like Navient earning lucrative new government servicing contracts in spite of past abuses–including illegal acts like overcharging 78,000 members of the military, and charges by both the Consumer Financial Protection Bureau and multiple state attorneys general of steering struggling borrowers toward paying more than they had to on their loans.

And the decision to rescind the July 20, 2016 memo rolls back commonsense consumer protections, such as requirements that servicers provide a higher level of service to the borrowers most at risk of default.

In order to have accountability, there must be real consequences when servicers violate the law. Secretary’s DeVos’s actions today moves us away from true accountability, and creates dangers for the very student loan borrowers the Department is responsible for protecting.