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 Ann WarrenOvernight Finance: Lawmakers grill Equifax chief over hack | Wells Fargo CEO defends bank's progress | Trump jokes Puerto Rico threw budget 'out of whack' | Mortgage tax fight tests industry clout Michelle Obama is exactly who the Democrats need to win big in 2020 Wells Fargo chief defends bank's progress in tense Senate hearing 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.”

Warren teamed with Sens. Jeanne ShaheenCynthia (Jeanne) Jeanne ShaheenHomeland Security searching some social media doesn't violate privacy The feds shouldn't blackball Kaspersky without public evidence Week ahead: Crunch time for defense bill’s cyber reforms | Equifax under scrutiny MORE (D-N.H.), Roy BluntRoy Dean BluntThe Hill's Whip List: Republicans try again on ObamaCare repeal Another health funding cliff puts care for millions at risk Top Senate Dem: We're going forward with understanding we can work with White House on DACA MORE (R-Mo.) and James Lankford (R-Okla.) on Tuesday to unveil a bill that would block DeVos’s plan, requiring the Education Department to maintain multiple student loan services.

Other Republican lawmakers praised DeVos’s move to scrap her original plan. A spokesman for House Education Committee Chairwoman Virginia FoxxVirginia FoxxBill to change joint-employer definition advances in House Reporter beats lawmakers to win charity spelling bee America’s workers, job creators need the Save Local Business Act 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.