DeVos abandons student loan servicing overhaul

DeVos abandons student loan servicing overhaul

Education Secretary Betsy DeVos on Tuesday announced she is scrapping her plan to consolidate the nation’s federal student loan service providers.

DeVos’s original plan — to select just one company to collect student debt payments on the federal government’s behalf — faced bipartisan backlash, including two Republican senators who signed on to legislation that would have blocked it.

DeVos said in a statement that the Education Department will instead pursue “a truly modern loan servicing environment,” adding that “we have a chance to turn what was a good plan into a great one.”

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Sen. Elizabeth WarrenElizabeth WarrenWarren: Education Dept lawyer may have violated conflict-of-interest laws Congress should think twice on the Israel Anti-Boycott Act Sanders plans to introduce single-payer bill in September MORE (D-Mass.) celebrated the announcement on Facebook but pledged to keep a close eye on DeVos moving forward.

“Today the Education Department announced that it will reverse its single loan servicer plan – and I’m glad that they are changing course,” she wrote.

“But it will be important to continue watching the Education Department and Betsy DeVos to evaluate whether its decisions are good for the millions of struggling student loan borrowers.”

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Other Republican lawmakers praised DeVos’s move to scrap her original plan. A spokesman for House Education Committee Chairwoman Virginia FoxxVirginia FoxxAmerica’s workers, job creators need the Save Local Business Act DeVos abandons student loan servicing overhaul House Republican offers bill to reverse controversial labor rule MORE (R-N.C.) told Politico that DeVos “made the right decision to cancel the single-servicer proposal.”

Lawmakers opposed the consolidation out of concerns that it would give too much power to one company, reduce competition and leave student borrowers more vulnerable.

The Education Department had argued when it unveiled the plan in April that it would simplify student loan borrowing and reduce costs.