Education Secretary Betsy DeVos is backing down on a major planned change to student loan payments. DeVos had proposed to funnel all federal student loan payments through a single company, claiming it would be all simple and tax-dollar-saving. This was not a popular idea:
... the plan ran into stiff opposition from industry groups and Capitol Hill. Democrats assailed the proposal, saying it would reduce consumer protections for borrowers and lead to a too-big-to-fail federal contractor. Some Republicans also criticized the plan for reducing competition among student loan servicers.
The Education Department announcement came several hours after a bipartisan group of senators unveiled legislation that would have blocked DeVos’ plans. The bill — sponsored by Sens. Roy Blunt (R-Mo.), Elizabeth Warren (D-Mass.), James Lankford (R-Okla.) and Jeanne Shaheen (D-N.H.) — would require the department to keep its current system of “multiple student loan servicers.”
An Education Department spokesperson claims that this legislation had absolutely nothing to do with the plan being dropped, which … maybe, maybe not. But the official explanation for the decision isn’t especially comforting:
The changes, she said, had “been under consideration” since DeVos tapped A. Wayne Johnson as the new head of student aid in June and he “brought his fresh perspective and private sector experience” to the project.
A. Wayne Johnson’s private sector experience, of course, includes being the CEO of a company that services student loans, a job he literally held at the time DeVos put him in charge of student loans for the federal government. So while it’s great to see Plan A killed off, the prospects for Plan B coming from DeVos and Johnson aren’t super confidence-inspiring.